Former FTX CEO Bankman-Fried arrested in Bahamas after U.S. files charges - Reuters

Dec 12 (Reuters) - (Editor's note: This communicative contains connection successful paragraph 18 that immoderate readers whitethorn find offensive)

FTX laminitis Sam Bankman-Fried was arrested successful the Bahamas astatine the behest of U.S. prosecutors connected Monday, the time earlier helium was owed to attest earlier Congress astir the abrupt nonaccomplishment past period of 1 of the world’s largest cryptocurrency exchanges.

The apprehension marks a stunning fall from grace for the 30-year-old entrepreneur wide known by his initials SBF, who rode a roar successful bitcoin and different integer assets to go a billionaire galore times implicit until FTX's accelerated demise.

The exchange, launched successful 2019 and based successful the Bahamas, filed for bankruptcy Nov. 11 aft it struggled to rise wealth to stave disconnected illness arsenic traders rushed to retreat $6 cardinal from the level successful conscionable 72 hours. Since past it emerged Bankman-Fried secretly utilized $10 cardinal successful lawsuit funds to prop up his trading business.

The apprehension came arsenic Bankman-Fried prepared to lash out astatine his erstwhile lawyers astatine Sullivan and Cromwell, caller FTX CEO John Ray and rival speech relation Binance astatine a Congressional hearing.

In the testimony, a draught transcript of which was seen by Reuters, Bankman-Fried planned to accidental helium was pressured by Sullivan and Cromwell lawyers to nominate Ray arsenic CEO pursuing the abrupt exodus of lawsuit funds. And erstwhile wrong minutes helium changed his mind, pursuing an connection of billions of dollars of caller funding, helium was told it was excessively late.

Bankman-Fried volition present beryllium incapable to testify, according to Congresswoman Maxine Waters, who said successful a connection she was amazed to perceive of his arrest. Ray's grounds volition spell ahead.

Bankman-Fried was arrested soon aft 6:00 p.m. Monday (2300 GMT) astatine his flat complex, a luxury gated assemblage called the Albany, and volition look successful a magistrate tribunal connected Tuesday, Bahamian constabulary said. The Bahamas lawyer general's bureau said it expects helium volition beryllium extradited to the United States.

A spokesperson for the U.S. Attorney's bureau successful Manhattan confirmed Bankman-Fried had been arrested successful the Bahamas but declined to remark connected the charges.

U.S. prosecutors said they had a sealed indictment against Bankman-Fried and charges would beryllium revealed connected Tuesday. The New York Times reported helium faces fraud and wealth laundering charges. The U.S. Securities and Exchange Commission separately authorized charges relating to Bankman-Fried's violations of securities laws, the regulator said connected Monday.

Bankman-Fried and his lawyer Mark Cohen did not instantly respond to requests for comment, nor did Sullivan and Cromwell, FTX, Ray and Binance.

Bankman-Fried has said helium doesn't deliberation helium has immoderate transgression liability. "I didn't ever effort to perpetrate fraud," Bankman-Fried said successful a Nov. 30 interrogation astatine the New York Times' Dealbook Summit.

CRYPTO INDUSTRY REELING

FTX's demise sent shockwaves done an already-battered cryptocurrency industry, which has seen a drawstring of meltdowns this twelvemonth that person taken down different cardinal players including Voyager Digital and Celsius Network.

More occupation mightiness beryllium connected the skyline for the industry. Reuters reported Monday that immoderate Justice Department prosecutors judge they person gathered capable grounds successful their long-running probe of Binance to complaint the world's largest cryptocurrency speech and immoderate apical executives.

A Binance spokesperson told Reuters for the article: "We don't person immoderate penetration into the interior workings of the U.S. Justice Department, nor would it beryllium due for america to remark if we did."

Bitcoin was dependable astatine $17,150. It is down much than 60% this year.

MEA CULPA

Since the illness of FTX, Bankman-Fried has fixed galore media interviews apologizing for his mistakes and explaining what happened astatine the company, thing that ineligible experts said could let prosecutors to constituent to inconsistencies to undermine his credibility with a jury.

"The defence is going to beryllium wholly boxed successful by the anterior statements SBF has made and the precise incisive questions helium has answered successful the property and connected societal media,” said transgression defence lawyer and erstwhile national authoritative Renato Mariotti.

In his written testimony, Bankman-Fried repeated his mea culpa: "I would similar to commencement by formally stating, nether oath: I fucked up," helium wrote.

Then, helium launched into an mentation of however things went severely astatine FTX and his hedge money Alameda Research, portion criticizing Sullivan and Cromwell and Ray arsenic good arsenic arch rival Binance for their actions arsenic his steadfast imploded.

UNDER PRESSURE

Describing his determination to springiness up his relation arsenic CEO of FTX and name Ray, Bankman-Fried said helium was pressured to bash truthful by Sullivan and Cromwell and the wide counsel of FTX's U.S. unit, who helium said was a erstwhile lawyer astatine the instrumentality firm.

Bankman-Fried said little than 10 minutes aft helium had signed a papers astatine 4.30 americium connected Nov. 10 to marque Ray the CEO of FTX, helium received "a imaginable backing connection for billions of dollars." Bankman-Fried said helium told his counsel to rescind the CEO assignment a fewer minutes aboriginal but was told it was already excessively precocious to bash so.

Bankman-Fried said helium had since been chopped disconnected from FTX's systems and Ray had not responded to his emails offering assistance oregon different information.

Bankman-Fried, who had go a salient and unconventional fig known for his chaotic hair, t-shirts and shorts during crypto's boom, said the fortunes of FTX and his trading steadfast Alameda declined rapidly this twelvemonth arsenic crypto currencies crashed amid rising involvement rates.

In precocious 2021, helium said Alameda had nett plus worth of much than $50 cardinal and manageable levels of debt. That became unsustainable arsenic integer assets declined.

"Last year, my nett worthy was valued astatine $20b,” Bankman-Fried wrote. “Last I saw, I judge my slope relationship had astir $100k successful it.”

Reporting by Jasper Ward successful Washington, Luc Cohen and Jack Queen successful New York, Brian Ellsworth successful Miami and Angus Berwick successful London; Editing by Megan Davies, Paritosh Bansal and Lincoln Feast

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