Time.news – Sam Bankman-Fried, founder of the cryptocurrency transaction platform Ftx, was arrested in the Bahamas. The arrest came after the New York district attorney reached an agreement with the government of the Bahamas. Bankman-Fried filed for bankruptcy with his platform. His extradition to the United States is expected in the next few hours.
The charge of fraud and money laundering
Bankman-Fried will be indicted by the New York District Attorney’s office with the charge of wire fraud, securities fraud, conspiracy to commit fraud in securities and money laundering.
The Southern District Attorney of New York Damian Williams in a tweet reported the arrest that took place at the request of the US government, but does not specify the details of the accusation, which were instead revealed by the New York Times which learned them from a source ” aware of the legal process”.
USA Damian Williams: Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government, based on a sealed indictment filed by the SDNY. We expect to move to unseal the indictment in the morning and will have more to say at that time.
— US Attorney SDNY (@SDNYnews) December 12, 2022
The founder of FTX he will appear before the Nassau Magistrate Court today. Bahamian Prime Minister Philip Davis said the country he and the US “have a common interest in holding accountable all individuals associated with FTX who may have betrayed public trust and broken the law.”
FTX filed for bankruptcy on Nov. 11 and, at the end of the same month, the company’s new executives filed for the first time in the bankruptcy court of the US state of Delaware to start the process.
Lawyers for the new management and current boss, John Ray, say a “substantial amount” of company assets have been misappropriated. The new management also said the company suffered from a “complete absence of corporate controls” and a lack of “reliable financial information”.
The failure
Bankman-Fried, 30, considered the ‘cryptocurrency guru’ until a few weeks ago, had created a platform for digital transactions in 2019 that has become one of the most important in the world, but revelations from a financial site, CoinDesk, have put bare a hole in the balance sheet and overdraft accounts.
There was talk of a hole of at least eight billion dollarsthe result of a series of bankruptcy investments that the young entrepreneur had carried out, investing their money without the knowledge of the users.
The platform, which was previously valued at $32 billion, is estimated to have more than a million creditors worldwide. Debts of more than $3 billion owed to its top 50 creditors have been admitted so far. Bankman-Fried attributes the failure, at least in part, to the massive cryptocurrency sell-off that took place earlier in the year.
The news of the bankruptcy, later confirmed by Bankman-Fried himself with a disarming sentence, “I’m sorry, I made a big mistake”, sparked panic among millions of customers, to the point of comparing Ftx’s bankruptcy to that of Lehman bank Brothers in 2008, which overwhelmed Wall Street and threw millions of savers out of business. To keep creditors at bay, the ‘guru’ has initiated bankruptcy proceedings, a formula that freezes the paperwork for repaying the money pending a complete investigation into the company’s accounts
Testimony expected in the House
Sam Bankman-Fried confirmed that today, Tuesday, he would testify before the House Finance Committee about the financial collapse of his platform. “I was summoned,” he said on “Unusual Whales,” an American podcast focused on financial topics.
The committee chair, Democrat Maxine Waters, and Republican Patrick McHerny had fI put pressure on Bankman-Fried to show up for the audition, but he initially resisted, saying he wanted to wait to “understand better” what had led to his platform collapse. “I want to make sure – he clarified in the podcast interview – that everything I say is not only true for me, but for everyone”.