The cryptocurrency tycoon Sam Bankman-Fried was arrested on Monday in the Bahamas, reported US authorities seeking to charge him for the collapse of the FTX cryptocurrency platform.
“We will give more information about the accusation” on Tuesday morning, prosecutor Damian Williams said in a tweetwhich did not specify the nature of the charges.
Bankman-Fried hizo several appearances in the media in the last monthdespite the risk of being prosecuted for fraud after the fall of the firm that at the beginning of the year was valued at 32,000 million dollars.
Bahamas Attorney General Ryan Pinder reported in a statement via Twitter that the United States “filed a complaint” against the 30 year old man and “he will probably request his extradition”
The former head of FTX will appear before a court in the Bahamian capital, Nassau, on Tuesday.
Both countries “have an interest in holding accountable individuals linked to FTX who have defrauded the public or violated the law,” said Philip Davis, prime minister of the northeastern Cuban kingdom.
He added, quoted in a statement, that the Bahamas will conduct its own “Criminal investigation into FTX collapse”.
In the United States, “if he is convicted of fraud, he could spend the rest of his life in prison, given the number,” estimated Jacob Frenkel of the Dickinson Wright consultancy.
“There would be no prosecution if prosecutors were not absolutely convinced that they are going to get a conviction,” added the federal investigations expert who worked for the US Securities and Exchange Commission (SEC).
“little knowers”
Sam Bankman-Fried is expected to testify before a committee of the US House of Representatives this Tuesday, along with John Ray, the new director of FTX.
The platform’s former executives have demonstrated a “total failure” at all levels of control, spending without counting their clients’ money, John Ray said Monday, in a document released on the eve of the congressional hearing.
At first sight “the collapse of FTX appears to be the result of the absolute concentration of control in the hands of a small group of inexperienced individuals, little knowledgeable and possibly corrupt, who did not put in place any control system for a company that is entrusted with other people’s money or assets,” said the new manager.
Considered one of the leading cryptocurrency exchanges in the world, FTX suddenly stopped returning money deposited by its clients at the beginning of November. The group filed for bankruptcy on November 11.
“I never tried to defraud anyone,” Sam Bankman-Fried said at the end of November in a conference organized by the newspaper ‘The New York Times’. “Clearly I made a lot of mistakes and I would give everything to be able to amend certain things,” he said.
The former FTX boss chose to give multiple interviews and statements on Twitter, despite the seriousness of the allegations against him.
“Spending Frenzy”
“It was too risky a strategy,” Jacob Frenkel said. “In the end, it was as if he had admitted that he had acted criminally.”
The investigation has already shown that the assets deposited by FTX clients were mixed with the Alameda cryptocurrency investment company, also founded by Sam Bankman-Fried.
Alameda invested with the funds of FTX clients to make risky bets.
Such use of funds would constitute fraud if it is proven that it violated the terms of the agreement between FTX and its clients, jurists estimate.
FTX was also under a “spending frenzy” as of the end of 2021, with some $5 billion worth of companies and investments “may only be worth a fraction” of that, according to John Ray.
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The platform also disbursed more than $1 billion in loans or payments to people within the company.
For the new manager who has overseen several bankruptcy cases, including that of energy giant Enronthe target now is “maximize value” of the assets that FTX still has to, if possible, reimburse customers and creditors of the group.