Sam Bankman-Fried has been arrested by authorities in the Bahamas at the request of the U.S. government, just a day before the disgraced former FTX CEO was due to testify before Congress.
Bankman-Fried was arrested by the Royal Bahamas Police Force following a formal notification from the United States government that it has filed criminal charges against him, according to a Dec. 12 statement from the Bahamas Attorney General (AG) and Minister of Legal Affairs, Ryan Pinder.
Citing a person with knowledge of the matter, The New York Times reported on Dec. 12 that the charges against Bankman-Fried include wire and securities fraud, conspiracy to commit wire and securities fraud and money laundering,
The U.S. will likely request the extradition of Bankman-Fried, with Pinder stating that the Bahamas will “promptly” process any extradition request.
Bahamian Prime Minister Philip Davis said in a statement that both countries have "a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law.
A Dec. 12 tweet from the U.S. Attorney’s Office for the Southern District of New York said authorities in the Bahamas arrested Bankman-Fried based on a sealed indictment it filed that it plans to unseal “in the morning.”
Bloomberg reported on Dec. 10 that prosecutors from New York, FBI agents and regulators met with FTX’s lawyers to discuss the documentation that investigators want to obtain.
The U.S. Department of Justice (DOJ) was "closely" examining whether FTX improperly transferred hundreds of millions around the same time as the company declared bankruptcy on Nov. 11.
Bahamian authorities were similarly undertaking their own “active and ongoing” investigation into FTX as announced on Nov. 27 by Pinder that involved the country’s Securities Commission, the Financial Intelligence Unit and the police’s financial crimes unit.
Bankman-Fried’s arrest comes a day before he was expected to appear remotely to testify before the House Committee on Financial Services in a hearing investigating the collapse of the exchange.
Merely hours before news of his arrest by Bahamian police, Sam Bankman-Fried took to Twitter to deny his involvement or knowledge of a secret group chat named “Wirefraud” — which allegedly involved former FTX and Alameda ranking executives.
In a Dec. 12 response to a report from the Australian Financial Review (AFR), Bankman-Fried used Twitter to deny involvement in or knowledge of a “Wirefraud” group chat on messaging app Signal, which reportedly included members of Bankman-Fried’s inner circle, including FTX co-founder Zixiao “Gary” Wang, FTX engineer Nishad Singh and former Alameda CEO Caroline Ellison.
The AFR report said the chat was used to send secret information about FTX and Alameda's operations in the lead-up to its failure.
Bankman-Fried however said on Twitter that if the group chat was “true” he “wasn't a member” and was “quite sure it's just false” as he had “never heard of such a group.”
Until very recently, Bankman-Fried was expected to appear remotely before a United States House Committee hearing on Dec. 13 to explain the collapse of the FTX exchange. But he was taken into custody by Bahamian authorities on Dec. 12, to face U.S. charges that reportedly include wire and securities fraud and money laundering.
Committee Chair Maxine Waters on confirmed later on Dec. 12 that the panel “will not be able to hear” SBF's testimony hearing due to the arrest.
Bankman-Fried was also requested to attend a separate hearing on Dec. 14 with the Senate Committee on Banking but had never confirmed his attendance, with his lawyers reportedly refusingto accept a subpoena compelling his testimony, according to a Dec. 12 joint statement from Senators Sherrod Brown and Pat Toomey.
Chief restructuring officer and FTX CEO John Ray, in written testimony released ahead of his appearance at the House Committee hearing, said FTX customer assets were “commingled” with Alameda’s funds.
Ray asserted that Alameda “used client funds to engage in margin trading which exposed customer funds to massive losses” and the trading firm's business model required it to deploy those funds to “various [...] exchanges which were inherently unsafe.”
Pro-crypto United States Senator Cynthia Lummis has remained steadfast in her support for Bitcoin as part of diversified retirement plans, despite calls otherwise from her Senate peers.
As it stands, Lummis seems to be just one of the few openly crypto-friendly politicians in the United States and has notably pushed for progressive crypto regulation alongside Senator Kirsten Gillibrand.
Speaking with online news outlet Semafor on Dec. 12, Lummis outlined that crypto winter has not shaken her resolve in BTC and that she’d still like to see the asset included in United States 401(k) retirement plans:
“I'm very comfortable with making sure that people can include Bitcoin in their retirement funds because it's just different than other cryptocurrencies.”
“I personally believe that because there are only going to be 21 million Bitcoin that are mined, that Bitcoin will go up,” Lummis said, adding that it's “a personal belief, just based on its scarcity.”
But the “jury's still out on other cryptocurrencies," the senator said.
These comments are a slightly different stance from what Lummis initially outlined on retirement plans back in June 2021.
At the time, she had vouched for the inclusion of other certain cryptos, but it appears that crypto winter and the recent FTX debacle may have shifted her opinions slightly.
“I’d also like to see individuals be able to use Bitcoin and cryptocurrencies of their preference that are safe, that have met the hurdles of anti-money laundering and Bank Secrecy Act,” Lummis said.
Elsewhere on Capitol Hill, senators including Elizabeth Warren, Tina Smith and Richard Durbin instead have used recent market turmoil to reiterate their calls for Fidelity Investments to wind back its BTC-linked 401(k) retirement product.
In a Nov. 21 letter addressed to Fidelity’s CEO Abigail Johnson, the three senators highlighted the FTX debacle as a major reason to step away from offering BTC exposure in retirement plans.
“As with all financial products, price fluctuations are an expected feature of the market — and it is shortsighted to believe that setbacks in an industry are an indication that it won’t experience long-term growth,” said Jonah Allon, a press secretary for Adams.
Other senators have been piling in on crypto of late, with Jon Tester stating earlier this week that he sees “no reason why” crypto should exist at all and Warren enthusiastically stating that “finally there are more people blowing the bullshit whistle.”
This Daily Dose was brought to you by Cointelegraph.