Sam Bankman-Fried, the founder of FTX crypto exchange who led the cryptocurrency exchange getting bankrupt, has been arrested in the Bahamas on Monday after US prosecutors criminally charged him.
How did Sam Bankman-Fried gain fame?
The thirty-year-old entrepreneur led a cryptocurrency boom to make FTX one of the largest crypto exchanges in the world, making a net worth of $26.5 billion as of the last year, as reported by Forbes. He was even being called the “next Warren Buffet.”
The Bahamas-based exchange declared itself bankrupt in November after struggling to raise funds for staving off collapse as traders jumped in to withdraw $6 billion within seventy-two hours from the platform.
Bankman-Fried resigned from the CEO post on the same day of declaring bankruptcy.
Why was Sam Bankman-Fried Arrested?
Sam Bankman-Fried moved $10 billion from FTX to his firm Alameda Research, and that created a liquidity crunch for the crypto exchange platform. Customers alleged that at least #1 billion of their funds vanished.
The ex-FTX CEO denied the allegation of fraud but called it a result of risk management failure in the series of public appearances and interviews after that.
The US Attorney’s Office started investigating the FTX funds case in mid-November, along with Commodity Futures Trading Commission and Securities and Exchange Commission also opening probes separately.
The crypto investors losing $11 billion from FTX also sued him.
On 12 December 2022, the Office of the Attorney General of The Bahamas is announcing the arrest by The Royal Bahamas Police Force of Sam Bankman-Fried (“SBF”), former CEO of FTX. pic.twitter.com/CRNeLPAbVp
— Latrae L. Rahming (DOC)🇧🇸 (@latraelrahming) December 12, 2022
USA wants his Extradition
The Office of the Bahaman Attorney General said it made the arrest after receiving official confirmation of charges against the FTX founder and requesting to arrest him. It also added that it expects extradition of Bankman-Fried to the US.
Bankman-Fried was about to testify before the US House Financial Services Committee.
Netizen Reaction? – Twitter was Flooded with Posts
Damian Williams, the Attorney for the Southern District of New York, also confirmed the news.
USA Damian Williams: Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government, based on a sealed indictment filed by the SDNY. We expect to move to unseal the indictment in the morning and will have more to say at that time.
— US Attorney SDNY (@SDNYnews) December 12, 2022
Lee Zeldin, a US House Financial Services member, wrote on Twitter asking why Sam was not allowed to testify and answer their questions.
Tomorrow, Sam Bankman-Fried was scheduled to testify in front of the House Financial Services Committee. @HouseGOP was ready to grill him six ways to Sunday.
Now breaking tonight, SBF was just arrested!🧐
Why not allow him to 1st testify tomorrow and answer our many questions?
— Lee Zeldin (@RepLeeZeldin) December 13, 2022
Republican nominee and former prosecutor Abe Hamadeh also wrote that the arrest before testifying “doesn’t make sense.”
Sam Bankman-Fried was scheduled to testify to the House Financial Services Committee in Washington tomorrow. Instead, the US District for the Southern District of New York arrested him in the Bahamas.
As a former prosecutor this doesn’t make much sense. You want him to talk…
— Abe Hamadeh (@AbrahamHamadeh) December 13, 2022
Impact on the Crypto Market
The crypto industry went through turmoil following the demise of FTX this year. Amid meltdowns strong enough to take down key players like Celsius Network and Voyager Digital, the overall market slumped. Now, we have to see how the arrest of Bankman-Fried shapes it further.
What Happens Next with Bankman-Fried?
According to legal experts, the charges against Sam Bankman-Fried may make him stay in jail for decades, if not for rest of his life.
