FTX founder Bankman-Fried arrested in the Bahamas

Bankman-Fried’s arrest comes the night before he was scheduled to testify remotely in front of the House Financial Services Committee, which is investigating the collapse of his multibillion-dollar crypto empire. Financial Services Chair Maxine Waters
said in a statement that she was disappointed he would not testify but that she remained committed to getting to the bottom of what happened at FTX.

Bankman-Fried — who until early November was the toast of Washington policy circles — has faced mounting allegations that he misused FTX customer assets to prop up his investment firm Alameda Research.

In prepared testimony for the Financial Services panel, the company’s new CEO John Ray III, wrote that Alameda used client funds to engage in margin trading, exposing customers to massive losses.

“[T]he FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people’s money or assets,” Ray, who stepped in as the bankrupt cryptocurrency exchange’s top executive last month, wrote in prepared Congressional testimony on the exchange’s collapse.

FTX’s sudden downfall sparked criminal and civil investigations across the globe. Despite the looming legal threat, the disgraced crypto titan continued to make a series of public appearances in which he detailed FTX’s extensive accounting failures and how customer assets were routinely routed through Alameda.

“I didn’t ever try to commit fraud on anyone,” Bankman-Fried said at the DealBook Summit in late November — three weeks after FTX filed for bankruptcy.

A government spokesperson in the Bahamas said in a statement that Bankman-Fried’s arrest “followed receipt of formal notification from the United States that it has filed criminal charges against SBF and is likely to request his extradition.”

The spokesperson added, “It was deemed appropriate for the Attorney General to seek SBF’s arrest and hold him in custody pursuant to our nation’s Extradition Act.”