A month after the Chapter 11 bankruptcy filing of the FTX/Alameda construct, authorities in the Bahamas have arrested founder and former CEO Sam Bankman-Fried. The arrest came one day before scheduled hearings in the U.S. Congress.
The U.S. Attorney's Office for the Southern District of New York shared a sealed indictment with the Bahamian government, setting the stage for the extradition and U.S. trial of the one-time crypto billionaire. Local authorities acted swiftly and arrested Sam Bankman-Fried (aka SBF) the same day in the capital city of Nassau. His arrest is the first concrete step taken by regulators to hold individuals accountable for FTX's billion-dollar implosion.
Various fraud claims against former FTX CEO
Prior to the announcement of the arrest, SBF had been expected to testify virtually before the House Financial Services Committee. However, a draft of his full testimony leaked to media representatives and was published by Forbes shortly after Bankman-Fried's arrest. The U.S. Congress would not have received any new information anyway. In the unveiled draft, the former FTX CEO merely repeated his "bank run" explanation of the collapse and fired back against Binance CEO Changpeng Zhao ("CZ") as well as FTX bankruptcy chief John Ray - who exposed the crypto exchange's appalling corporate practices in a wide variety of testimony before the House of Representatives.
In a complaint filed by New York authorities, he is charged with the following counts, among others: Wire fraud, conspiracy to commit wire fraud, securities fraud, conspiracy to commit securities fraud and money laundering. The indictment is expected to be unsealed in the coming days. Meanwhile, the U.S. Securities and Exchange Commission (SEC) has filed a separate case against Bankman-Fried. This relates to "violations of our securities laws that will be publicly disclosed tomorrow in the Southern District of New York," according to the head of the enforcement division, Gurbir Grewal.
Gurbir Grewal: We commend our law enforcement partners for securing the arrest of Sam Bankman-Fried on federal criminal charges. The SEC has authorized separate charges relating to his violations of securities laws, to be filed publicly tomorrow in SDNY. https://t.co/ON0LgY4mf4
— U.S. Securities and Exchange Commission (@SECGov) December 13, 2022
Extradition to the United States
The Bahamas Attorney General confirmed that the United States "will likely seek his extradition." Bahamian police confirmed his arrest and said he would soon appear in a Nassau court. The Bahamas and the United States, have a common interest in bringing to justice all persons associated with FTX who may have betrayed the public trust and violated the law.
An extradition treaty has existed between The Bahamas and the United States since the early 20th century. The current treaty was signed in 1990 and requires the requesting party to produce a warrant issued by a judge or "other competent authority." Extradition to the States would now be justified. Nonetheless, the Bahamas will also continue its regulatory and criminal investigations into the FTX collapse and "continue to cooperate with law enforcement and regulatory authorities in the United States and elsewhere."
