- SBF arrested in the Bahamas as U.S. Justice, SEC file criminal charges ahead of Congressional hearing.
- Crypto Twitter reacts with optimism to SBF’s timely’ arrest
- The December 13th Congress hearing takes a drastic turn, SBF does not attend, and John Ray III is invited on December 14.
Former FTX CEO Sam Bankman-Fried was arrested in the Bahamas on the evening of Monday, December 12. The arrest came as the United States government advanced from requests and negotiations to criminal charges and extradition arrangements ahead of December 13’s Congressional hearing into the collapse of cryptocurrency exchange FTX.
The announcement first came in a communication by the Bahamas’ Office of the Attorney General, saying they had arrested SBF following a directive by the U.S. Government that “it has filed criminal charges against SBF and is likely to request his extradition.” Citing the Twitter post from the Bahamian news site:
“JUST IN: Sam Bankman-Fried Has Been Arrested On December 12, 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.”
Some players in the crypto space speculate the Bahamas did it to aid SBF in evading appearance at today’s first Congressional hearing. In contrast, others say it was a move to prevent the U.S. from taking him into custody themselves.
In a statement, the Attorney General of the Bahamas, Senator Ryan Pinder, said, “As a result of the notification received and the material provided in addition to that, it was deemed appropriate for the attorney general to seek SBF’s arrest and hold him in custody under our nation’s Extradition Act.
U.S. DOJ Responds with a Terse Statement, and the SEC Joins In
Shortly after the Bahamas’ announcement, the U.S. Department of Justice issued its terse statement, saying:
“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.”
As of December 13, the DOJ charges against Sam Bankman-Fried include wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering.
Besides the Justice Department, the U.S. Securities and Exchange Department (SEC) has also issued a press release highlighting different criminal charges against the since-shamed billionaire entrepreneur Sam Bankman-Fried. An excerpt from the announcement reads:
“The Securities and Exchange Commission today charged Samuel Bankman-Fried with orchestrating a scheme to defraud equity investors in FTX Trading Ltd. (FTX), the crypto trading platform of which he was the CEO and co-founder.”
The SEC said SBF “raised over $18 billion from equity investors since 2019.” As per the revelation, the raise included almost “$1.1 billion from approximately 90 U.S.-based investors”. It follows that Bankman-Fried achieved this much by presenting FTX as a “safe, responsible crypto asset trading platform.”
In reality, however, the SEC challenges that Bankman-Fried orchestrated a years-long fraud to conceal several issues from FTX’s investors. The SEC also claims that Bankman-Fried used customer funds to “make undisclosed venture investments, lavish real estate purchases, and large political donations.”
Commenting on the matter, SEC chair Garry Gensler noted that the agency alleges that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto. Further, he also cautioned, “platforms that don’t comply with our securities laws, the SEC’s Enforcement Division is ready to take action.”
Rep Maxine Waters Speaks for Congress
Representative Maxine Congress, who oversees the committee where SBF is answerable, has since commented that she is disappointed Mr. Bankman-Fried would not be attending the hearing. However, she assured the house’s commitment to finding the underlying cause of what happened, calling for new FTX CEO John Ray III to testify before the committee on Wednesday, December 14.
Crypto Twitter Explodes on FTX Arrest
Crypto Twitter has been set ablaze by the news of SBF’s arrest and was further invigorated that SBF had declined to testify before Congress on December 13, despite his numerous media appearances. Zerohedge, a prominent libertarian financial blog, ridiculed the entire situation and Bankman Fried’s ability to dictate terms to legislators, saying:
“It may take me 50 years to learn what happened in the company I ran, but by god, I SWEAR it will be my duty to appear before Congress… sometime in 2089.”
Nevertheless, others are not convinced, accusing governments of suppressing SBF’s activities. U.S. Senator Cynthia Lummis was likewise happy, tweeting that the decision to hold Bankman-Fried accountable for the “good, old-fashioned fraud” he allegedly committed was correct.