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Former FTX CEO Sam Bankman-Fried Arrested in Bahamas, May Face US Trial

UTC by Mayowa Adebajo · 3 min read
Former FTX CEO Sam Bankman-Fried Arrested in Bahamas, May Face US Trial
Photo: Unsplash

Sam Bankman-Fried is expected to be extradited to the United States to face trial.

On Monday evening, Bahamian authorities moved in on troubled crypto billionaire and FTX founder Sam Bankman-Fried (SBF), and arrested him in the process. The arrest follows a sealed letter of the indictment that was sent to the Bahamian government from the office of the United States Attorney for the Southern District of New York. While the arrest signals the intent of regulators to not let the implosion of FTX go unraveled, it also sets the tone for SBF’s extradition that is expected to precede a US trial.

Meanwhile, SBF had been expected to make a virtual appearance at a hearing with the House Financial Services Committee later today. However, this arrest now appears to have faded the possibility of that happening.

For the new development, Rep. Maxine Waters, who oversees the committee, has expressed her disappointment. That is because the committee will no longer be able to hear directly from the horse’s mouth as the hearing goes on. At least, not for today. She wrote:

“The American public deserves to hear directly from Mr. Bankman-Fried about the actions that’ve harmed over one million people.”

Sam Bankman-Fried Is Arrested and Slammed with Multiple Criminal Charges

For what it’s worth, SBF, who is at the heart of everything related to the FTX collapse, has several criminal charges lined up against him, albeit from various agencies. For instance, New York Times reports that he’s currently being charged with wire fraud, wire fraud conspiracy, money laundering, and securities fraud conspiracy. That is as far as the US Attorney for the Southern District of New York is concerned.

The Securities and Exchange Commission (SEC), however, has other charges in mind against Bankman-Fried. According to SEC’s enforcement director Gurbir Grewal, the regulator is charging SBF with violations of its securities laws.

FTX’s woes began when a run on deposits exposed an $8 billion hole in its accounts. At the time, it had a highly concentrated position in self-issued FTT coins. The same coins were used by its sister company, Alameda Research, as collaterals for crypto loans worth billions. Shortly after the revelation, rival exchange Binance announced it would be selling its stake in FTT. That was the beginning of the end. Binance’s announcement kickstarted a massive withdrawal of funds, with FTX first freezing assets before declaring bankruptcy a few days after.

It is worth mentioning that SBF could face life imprisonment, should the government decide to pursue the wire or bank fraud charges.  But whatever might be the case, SBF’s arrest is very significant for the crypto industry. It sets a precedence that crypto businessmen will be held accountable, even in white-collar cases.

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