FTX Bankman-Fried under investigation, arrested

The former CEO of failed crypto firm FTX, Sam Bankman- Fried, was arrested Monday by Bahamian officials at the request of the U.S government and U.S. attorney’s office.

Bahamian authorities arrested the former CEO based on a sealed indictment file by the U.S. Attorney’s Office for the Southern District of New York, according to U.S. Attorney Damian Williams.

Bankman-Fried has been under criminal investigation following the sudden collapse of the company. The firm filed for bankruptcy on Nov. 11 when it ran out of money following a cryptocurrency equivalent of a bank run.

Bankman-Fried’s arrest came the day before he was due to testify in front of the House Financial Services Committee, along with the company’s current CEO, Joh Ray III.

Bankman-Fried was called to testify in front of the Senate committee after his crypto exchange FTX crashed in a matter of days. Before the company imploded, FTX reportedly transferred billions of dollars in client funds to Bankman-Fried’s trading firm, Alameda Research, which was run by his girlfriend, Caroline Ellison..

In the letter to Bankman-Fried requesting his testimony, Sen. Pat Toomey (R-PA) and Sen. Sherrod Brown (D-OH) wrote that “there are still signifi cant unanswered questions about how client funds were misappropriated, how clients were blocked from withdrawing their own money, and how you orchestrated a cover up.”

Concerns arose after the Senate Banking Committee announced that Bankman-Fried was refusing to testify at a Wednesday hearing about his company’s implosion.

“We have offered Sam Bankman-Fried two different dates for providing testimony before the Senate Banking, Housing, and Urban Affairs Committee, and are willing to accommodate virtual testimony. He has declined in an unprecedented abdication of accountability,” the committee’s leaders said in a joint statement. Additionally, attorneys for Bankman-Fried said he is unwilling to accept service of a subpoena.

The FTX bankruptcy filings state the company could owe money to upwards of 1 million people. And the basic facts are pretty grim – if people can’t get their money back, the company probably broke the law doing something else with it.

Thus far, FTX is short $8 billion dollars,” said Charlie Gerstein, an attorney with the firm Gerstein Harrow, who has filed class action lawsuits against other cryptocurrency companies. “And there’s only two conceivable categories of explanation for what happened to that $8 billion. The first is they traded it in speculative investments and lost it. Or they stole it.”

There’s also this. There are also reports that hackers may have stolen several hundred million dollars of customers’ money amidst the frantic wave of customer withdrawals.