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On Monday, Sam Bankman-Fried (SBF), the founder of the failed cryptocurrency exchange FTX, was arrested in the Bahamas. The Bahamian government said in a press release that the SBF’s arrest “followed receipt of formal notice from the United States that it has filed criminal charges” against Bankman-Fried and will most likely seek to extradite him back to the United States.
SBF has been under investigation by the Justice Department in connection with the collapse and November bankruptcy of FTX, his cryptocurrency company once valued at $32 billion.
The New York Times reports that the U.S. Attorney’s Office for the Southern District of New York confirmed the charges. Prosecutors went on to say that we can expect an indictment to be announced on Tuesday. According to the NYT’s sources, SBF faces a laundry list of charges, including wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering.
If this is true, then I was not a member of the inner circle
(I’m pretty sure that’s just untrue; I’ve never heard of such a group)
— SBF (@SBF_FTX) 12 December 2022
News of SBF’s arrest came shortly after he responded on Twitter to a report from Australian Financial Review that a group connected to the management of FTX created a Signal chat group called “Wirefraud” which they used to exchange confidential information about the company’s operations before the implosion. “If this is true, then I was not a member of the inner circle,” Bankman-Fried tweeted on an account linking to the AFR article, adding, “(I’m pretty sure it’s just untrue; I have never heard of such a group).”
The Times quoted Damian Williams, U.S. attorney for the Southern District of New York, as saying in a statement that “Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. government, based on a sealed indictment,” and that his office expects “to move to quash the indictment tomorrow and will have more to say at that time.
FTX’s demise began after an early spike in withdrawal requests in November revealed an $8 billion hole in the company’s accounts. SBF asked for help from the Binance cryptocurrency exchange, and it initially looked like Binance might follow through — but when the larger exchange scrutinized FTX’s financial situation, the deal failed to materialize.
Sam Bankman-Fried was scheduled to testify externally on Tuesday before the House Finance Committee. It is safe to say that the hearing is likely to be postponed.