- The Washington Times - Monday, December 12, 2022

The former CEO of the failed cryptocurrency firm FTX has been arrested in the Bahamas, just one day before he had been scheduled to testify to a congressional panel.

The Bahamian attorney general said in a statement Monday that Sam Bankman-Fried had been detained upon request from the U.S.

“The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law,” Prime Minister Philip Davis said in a statement.

The Twitter account of the U.S. attorney for the Southern District of New York said Monday that the arrest was a response to an indicted of Mr. Bankman-Fried from its office.

“We expect to move to unseal the indictment in the morning and will have more to say at that time,” Damian Williams, U.S. attorney for the district, said on the account.

The Securities and Exchange Commission also said Monday that it also plans to file charges Tuesday, accusing him of breaking U.S. securities law.

The Bahamian attorney general’s office said it expects to extradite Mr. Bankman-Fried to the U.S. “promptly” upon a formal request.

FTX filed for bankruptcy on Nov. 11, when the firm ran out of money after the cryptocurrency equivalent of a bank run.

The arrest came one day before Mr. Bankman-Fried was to testify remotely to the House Financial Services Committee about FTX’s collapse. The company’s current CEO, John J. Ray III, also was scheduled to appear.

Rep. Lee Zeldin, New York Republican and a member of the panel, smelled something fishy in the timing.

“Tomorrow, Sam Bankman-Fried was scheduled to testify in front of the House Financial Services Committee. House Republicans were ready to grill him six ways to Sunday. Now breaking tonight, SBF was just arrested! Why not allow him to first testify tomorrow and answer our many questions under oath?” he asked in a statement.

Rep. Maxine Waters, California Democrat and the panel chair, said that “although Mr. Bankman-Fried must be held accountable,” she was disappointed by the arrest.

“The American public deserves to hear directly from Mr. Bankman-Fried about the actions that’ve harmed over one million people, and wiped out the hard-earned life savings of so many,” she said in a Monday evening statement.

Mrs. Waters said the hearing will hear from Mr. Ray, whose prepared remarks the panel had released earlier Monday.

Mr. Ray plans to tell the committee Tuesday that FTX customer assets were commingled with assets from the Alameda trading platform, another company operated by Mr. Bankman-Fried. He will also testify that “loans and other payments were made to insiders in excess of $1 billion.”

“The 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,” Mr. Ray will say.

He also will testify that FTX Group “went on a spending binge in late 2021 through 2022, during which approximately $5 billion was spent buying a myriad of businesses and investments, many of which may be worth only a fraction of what was paid for them.”

Mr. Bankman-Fried was the second-largest donor to the Democratic Party in the 2022 election cycle, donating millions of dollars to lawmakers, the vast majority to Democrats.

Mrs. Waters has said she doesn’t want “to get into” his political donations, of which $300,351 went to nine members of the Financial Service panel, seven of them Democrats.

• Dave Boyer contributed to this article.

• Victor Morton can be reached at vmorton@washingtontimes.com.

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