Bankman-Fried’s arrest comes the day before he will testify remotely before the House Financial Services Committee, which is investigating the collapse of his multibillion-dollar crypto empire. Financial Services President Maxine Waters said in a statement that she was disappointed he was not testifying, but that she remained determined to shed light on what happened at FTX.
Bankman-Fried – who until early November was the toast of Washington political circles – has faced mounting allegations that he misused FTX client 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 was using customer funds to engage in margin trading, exposing customers to massive losses.
“[T]The collapse of the FTX group appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who have implemented virtually none of the systems or controls necessary for a business that is entrusted with the control of other people. money or assets,” wrote Ray, who last month stepped in as a senior executive at the bankrupt cryptocurrency exchange, in congressional prepared testimony on the exchange’s collapse. .
FTX’s sudden downfall sparked criminal and civil investigations around the world. 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 client assets were routinely funneled through Alameda.
“I never tried to commit fraud on anyone,” Bankman-Fried said at the DealBook summit in late November — three weeks after FTX filed for bankruptcy.
A Bahamian government spokesperson said in a statement that Bankman-Fried’s arrest “follows receipt of official notification from the United States that they have filed criminal charges against SBF and are likely to request his extradition”.
The spokesperson added, “It has been deemed appropriate that the Attorney General seek SBF’s arrest and hold him in custody pursuant to our country’s extradition law.”