FTX founder Sam Bankman-Fried arrested in the Bahamas after U.S. files criminal charges - CNBC

FTX laminitis Sam Bankman-Fried was arrested by Bahamian authorities this evening aft the United States Attorney for the Southern District of New York shared a sealed indictment with the Bahamian government, mounting the signifier for extradition and U.S. proceedings for the onetime crypto billionaire astatine the bosom of the crypto exchange's collapse.

Damian Williams, the U.S. Attorney for the Southern District of New York, said connected Twitter that the national authorities anticipated moving to "unseal the indictment successful the morning."

Bahamas Attorney General Ryan Pinder said that the United States had filed unspecified transgression charges against Bankman-Fried and was "likely to petition his extradition."

In a statement, Bahamian Prime Minister Philip Davis said, "The Bahamas and the United States person a shared involvement successful holding accountable each individuals associated with FTX who whitethorn person betrayed the nationalist spot and breached the law."

"While the United States is pursuing transgression charges against SBF individually, The Bahamas volition proceed its ain regulatory and transgression investigations into the illness of FTX, with the continued practice of its instrumentality enforcement and regulatory partners successful the United States and elsewhere," continued the statement.

Bankman-Fried was expected to attest earlier the House Financial Services Committee tomorrow. His apprehension is the archetypal factual determination by regulators to clasp individuals accountable for the multi-billion dollar implosion of FTX past month.

In November, FTX and its affiliates filed for bankruptcy and Bankman-Fried stepped down from his relation arsenic CEO. The crypto trading steadfast imploded successful spectacular manner pursuing a run connected assets similar to a slope run.

FTX's illness was precipitated when reporting from CoinDesk revealed a highly concentrated presumption successful self-issued FTT coins, which Bankman-Fried's hedge money Alameda Research utilized arsenic collateral for billions successful crypto loans. Binance, a rival exchange, announced it would merchantability its involvement successful FTT, spurring a monolithic withdrawal successful funds, equivalent to a slope run. The institution froze assets and declared bankruptcy days later. Reports aboriginal claimed that FTX had commingled lawsuit funds with Bankman-Fried's crypto hedge fund, Alameda Research, and that billions successful lawsuit deposits had been mislaid on the way.

Bankman-Fried was replaced by John J. Ray III, who had overseen Enron's bankruptcy. Ray is besides scheduled to attest earlier Congress this week. In prepared remarks released Monday, Ray said that FTX went connected a "spending binge" from precocious 2021 done 2022 erstwhile astir "$5 cardinal was spent buying a myriad of businesses and investments, galore of which whitethorn beryllium worthy lone a fraction of what was paid for them," and that the steadfast made much than $1 cardinal successful "loans and different payments...to insiders."

Ray besides said that FTX lawsuit funds were commingled with assets from Alameda Research, the hedge money besides founded by Bankman-Fried. Alameda utilized lawsuit funds to bash borderline trading, which exposed them to monolithic losses, Ray said.

Legal experts told CNBC that if the national authorities pursues ligament oregon slope fraud charges that Bankman-Fried could look beingness successful situation without the anticipation of supervised release. Such a terrible punishment would beryllium antithetic but not extraordinary. Ponzi strategy mastermind Bernie Madoff was sentenced to 150 years successful prison, an effectual beingness sentence, for his monolithic ponzi scheme. FTX's illness has already triggered the demise of BlockFi Lending, and has thrown the full abstraction into disarray.

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