February 4, 2023

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Disgraced crypto tycoon and ex-FTX CEO Bankman-Fried has been arrested in the Bahamas

Disgraced cryptocurrency tycoon Sam Bankman-Fried was arrested Monday in the Bahamas at the request of the United States, according to US officials seeking to indict him following the spectacular collapse of his FTX platform.

The arrest comes on the eve of Bankman-Fried’s scheduled appearance at a US Congressional hearing to testify under oath on the crypto exchange’s overnight demise.

The 30-year-old has resisted legal advice in recent weeks and has presented his version of his company’s sudden failure in numerous media appearances, mostly via video link from the Bahamas, where his company is headquartered.

“Tonight, at the request of the U.S. government, Bahamian authorities arrested Samuel Bankman-Fried based on a sealed indictment from the Southern District of New York,” said Damian Williams, the borough’s chief prosecutor, in a tweeted statement.

“We expect to unseal the charges tomorrow morning and have more to say at that point,” he added.

Like everyone else, Bankman-Fried had embodied the apparent advent of cryptocurrency as an over-the-top investment and no longer as a frowned upon get-rich-quick scheme shunned by banking.

But after FTX hit a $32 billion valuation, the implosion came after a Nov. 2 report on FTX’s relationship with Alameda, a trading company also controlled by Bankman-Fried.

The report revealed that Alameda’s balance sheet was heavily built on the FTT currency – a token created by FTX with no independent value.

FTT’s price plummeted in early November, sending both Alameda and FTX into turmoil, where Alameda had large trading positions.

Due to customer withdrawals and about $8 billion in vacancy, FTX and about 100 affiliates filed for bankruptcy protection on Nov. 11, prompting regulators, prosecutors, and angry customers who believed in the cryptocurrency hype.

Among the revelations, FTX is suspected of fraud for backing Alameda with billions of dollars in client funds that are now likely lost forever.

Questions also remain as to whether Bankman-Fried engaged in market manipulation or illegally provided inside information to Alameda.