FTX founder Sam Bankman-Fried arrested in Bahamas

The founder and former CEO of the bankrupt cryptocurrency platform FTX, Sam Bankman-Fried, was arrested Monday in the Bahamas and will be indicted in the U.S. as soon as Tuesday morning, according to U.S. and Bahamian authorities.

The attorney general for the Bahamas said in a statement Monday that the Royal Bahamas Police Force arrested Bankman-Fried after notification from the U.S. of pending criminal charges against the ex-billionaire, noting that the U.S. is “likely” to request extradition.

Bankman-Fried lives in the Bahamas, which is also where FTX was established and run from until its demise.

“The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public’s trust and broken the law,” said Attorney General Ryan Pinder.

Pinder said the Bahamas will continue its own investigations into the failed cryptocurrency platform while the U.S. pursues its charges against Bankman-Fried.

U.S. Attorney for the Southern District of New York Damian Williams said authorities in the Bahamas arrested the ex-billionaire after New York shared a sealed indictment with the island nation’s government.

“We expect to move to unseal the indictment in the morning and will have more to say at that time,” Williams said in a Twitter statement.

Bankman-Fried’s arrest marks a significant turning point in the federal investigations into his leadership of FTX and whether the missteps that led to its collapse were part of a criminal scheme.

FTX and its international network of affiliates filed for bankruptcy in November after the company was unable to satisfy billions of dollars in requested withdrawals from customers. Roughly 1 million FTX users have been locked out of money stored on the crypto trading platform and are unlikely to get much, if any, of it back through formal bankruptcy proceedings.

In a series of interviews following FTX’s collapse, Bankman-Fried has insisted he and fellow executives did not meant to hurt their customers and have expressed remorse for the company’s collapse. But the disgraced CEO has also admitted to several serious missteps and potentially fraudulent acts that led to the company’s implosion.

Bankman-Fried has acknowledged FTX used money meant to be deposited into customer accounts to fund investments made by Alameda Research, his now-bankrupt trading firm, despite explicitly promising not to do so in FTX’s terms of service. He also admitted to losing track of how much money FTX owed its customers and various creditors, along with how much actual cash the company held to back up its obligations.

“Never in my career have I seen such an utter failure of corporate controls at every level of an organization, from the lack of financial statements to a complete failure of any internal controls or governance whatsoever,” said FTX CEO John J. Ray, who was brought in to lead the company through bankruptcy proceedings, in testimony prepared for a House Financial Services Committee hearing scheduled for Tuesday.

Ray has more than four decades of leading failed companies through bankruptcy and restructuring, including Enron.

Bankman-Fried had also agreed to testify at the Tuesday hearing virtually from the Bahamas after more than a week of pressure from the Financial Services panel’s leaders. He said as recently as Monday afternoon that he planned to appear before the Financial Services panel but had declined a request to appear the next day at a hearing convened by the Senate Banking Committee.

Senate Banking Committee Chairman Sherrod Brown (D-Ohio) and ranking Republican Sen. Pat Toomey (Pa.) blasted Bankman-Fried in a joint statement issued hours before news of his Monday arrest. They said Bankman-Fried’s attorney had refused to accept a subpoena intended for his client, an act they called “an unprecedented abdication of accountability.”

Updated at 7:46 p.m.