Sam Bankman-Fried, the former CEO of crypto exchange FTX, was arrested Monday evening in the Bahamas as requested by the U.S. Government.
The Long Anticipated Arrest
Sam Bankman-Fried, 30, was arrested in the Bahamas on Monday evening, about four weeks after his crypto exchange, FTX, filed for bankruptcy and allegedly used $10 billion of customers’ funds to fund a separate business called Alameda Research.
The Bahamian attorney general said police arrested Sam after officials received “formal notification from the United States that it filed criminal charges,” who also learned the U.S. is “likely to request his extradition.”
“The Bahamas and 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,” Bahamian Prime Minister Philip Davis said in a statement.
The office “intends to process” an extradition request “promptly” when it is made. The criminal charges have yet to be released, at the time of this article.
He was slated to testify virtually from the Bahamas before a congressional committee on Tuesday, but it has not yet been confirmed.
What Happened
Just one month ago, FTX, a $32 billion behemoth in virtual currencies, filed for bankruptcy after suspicions arose that it was insolvent and also moving money around illegally.
A Look Back:
In early November, CoinDesk reported that most of Alameda’s assets were tied up in FTX’s in-house token, FTT.
Just days later, FTX rival Binance announced that it would sell its FTT holdings, worth around $530 million. Other traders scrambled to withdraw their own holdings from FTX, with around $6 billion of withdrawals over just three days, according to Bankman-Fried.
Alameda, a trading entity barely distinct from FTX, reportedly siphoned billions of dollars from FTX customer accounts without users’ knowledge.
In November, a report revealed the firm may have routinely engaged in the prohibited practice of frontrunning by making investment decisions based on insider knowledge of upcoming token launches on FTX’s trading platform.
Twitter went crazy in November after details emerged of the Crypto scandal. Some say Sam was the fall guy so crypto would be tightly regulated by the world’s government.
Below is a graphic showing Sam’s ‘Web of Influence.’
Sam Bankman-Fried’s Circle
Sam had grand ambitions for his wealth, which had once peaked at $26 billion. He was surrounded by key players in the crypto industry, had trusty sidekicks, and paved entryways to politics.
Bloomberg reported that when the news came out of the dirty money management, Sam’s fortune fell by 94% to $1 billion.
Sam’s brother Gabe used to work for a Congressman on the House Financial Services Committee.
Former Alameda Research CEO Caroline Ellison, 30, was Sam’s on-again, off-again former girlfriend. Her father is a professor at MIT.
“I didn’t get into this as a crypto true believer,” the Ellison-linked Tumblr account wrote in March. “It’s mostly scams and memes when you get down to it.”
Most high-level decisions about the operation of the $32 billion exchange FTX and its sister trading firm Alameda Research were made by ten of Sam’s roommates (including Ellison), according to Coindesk, who was at one time reportedly romantically or sexually involved with one another.
The group was characterized as a “polycule”—a romantic network of multiple people typically linked by overlapping sexual relationships.
Investors and Donation Recipients Are Thinking Twice
BlackRock, Sequoia Capital, SoftBank Group, Galaxy Digital, and many other companies have been impacted or potentially impacted.
Kevin O’Leary, from Shark Tank, made a $15 million deal to promote FTX, which he won’t see, and invested and lost about $9.7 million with FTX.
Democratic lawmakers who received millions of dollars in campaign donations from Sam Bankman-Fried say they will be ready to grill the former FTX CEO about the exchange’s collapse as liquidators, appointed by a Bahamian court, to take over FTX Digital Markets Ltd.’s affairs.
They say there is “significant” concern that FTX management lacked authority to put the crypto businesses into bankruptcy in the US.
Bankman-Fried has denied that he has avoided coming to the United States over the last month – where there are multiple government investigations into the FTX meltdown, for fear of being arrested.
Roughly 130 affiliated companies have begun Chapter 11 bankruptcy proceedings.
See all the connections with FTX here.
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