FTX CEO Sam Bankman-Fried won’t testify before Congress after all. The Bahamas Attorney General announced Monday that Bankman-Fried has been arrested and will likely be extradited to the United States soon for trial.
The Justice Department said it had arrested SBF after it “received formal notice from the United States that the United States is likely to file criminal charges against SBF and seek extradition.”
Last Friday, the Justice Department said it was investigating “closely” his role in the recent collapse of a multi-billion dollar cryptocurrency exchange, expected to hit more than a million retail investors news of his arrest shouldn’t surprise anyone.
Justice Department officials made these statements as they met with the cryptocurrency exchange’s bankruptcy team to discuss whether FTX fraudulently moved hundreds of millions of dollars just before filing for bankruptcy last November.
Damian Williams, USA: This afternoon, Bahamian authorities arrested Samuel Bankman-Freed at the request of the US government, based on a sealed indictment filed by SDNY. He plans to file an indictment in the morning, so I’ll give you more information then.
Bankman-Fried was scheduled to testify before the House Financial Services Committee on Tuesday.
However, as U.S. Attorney Damian Williams explained in a tweet Monday, Bankman-Fried has been detained “under a sealed indictment,” and will be disclosed and explained in the morning.
“Obviously I made a lot of mistakes. If I could do it again, I would do anything,” Bankman-Fried recently tried to explain to The New York Times. “I have never tried to defraud anyone”
The Bahamas government is also accused of collusion by FTX itself, not by the Department of Justice. Lawyers for the company said Monday (ahead of news of the arrests) that the Bahamas regulator, the operating entity, colluded with Bankman-Fried to control funds illicitly derived from all questionable transactions that took place shortly before bankruptcy.
Claimed to have helped move it to a crypto wallet.
Bankman-Fried stepped down as CEO of FTX in November and was replaced by John J. Ray III, the executive who held the helm during Enron’s bankruptcy proceedings. In preparatory remarks for congressional hearings on Tuesday, Ray paints a bleak picture of the final phase of FTX’s management and operations.
In it, FTX ran $5 billion in spending through the end of 2021 and early 2022, citing “a myriad of businesses and investments, many of which may be worth only a fraction of what we paid.” said it had made numerous loans and payments worth more than $1 billion to “insiders.”
These funds were also intermingled with funds from another Bankman-Fried firm, Alameda Research, which also engaged in high-risk margin trading with client funds.
Depending on what the Southern District Attorney’s Office announces tomorrow, Bankman-Fried could spend a long time in prison.
Wire fraud and bank fraud of this magnitude would risk Bankman-Fried to life in prison without parole, according to CNBC’s Legal Commission.
Former Theranos CEO Elizabeth Holmes and COO Sunny Balwani have just been sentenced to 11 and 12 years in prison, respectively, for their roles in a massive health care company fraud case.
In 2009, Ponzi scheme tycoon Bernie Madoff was sentenced to 150 years in prison, and in 2006, Jeff Skilling, who was involved in the Enron bankruptcy, was sentenced to 24 years in prison.