Police in the Bahamas have arrested the founder of collapsed cryptocurrency exchange FTX after criminal charges were filed in the US.
Sam Bankman-Fried, who goes by the name SBF, was head of the company that was valued at $47 billion before speculation FTX was running insolvent led to a liquidity crunch that ultimately brought down the exchange and has triggered a contagion effect throughout the world of cryptocurrency.
In a statement, Bahamian Attorney General Ryan Pinder said the country is expecting an extradition request to follow shortly.
“As a result of the notification received and the material provided therewith, it was deemed appropriate for the Attorney General to seek SBF’s arrest and hold him in custody pursuant to our nation’s Extradition Act,” Pinder said.
“At such a time as a formal request for extradition is made, the Bahamas intends to process it promptly, pursuant to Bahamian law and its treaty obligations with the United States.”
Despite accusation that Bankman-Fried defrauded FTX’s customers, he has remained in the public eye making public appearances from the Bahamas where his now bankrupt company was headquartered.
Two weeks ago, he appeared at a New York Times conference, where he said he “did not try to commit fraud on anyone”.
Last week, SBF agreed to front to a US House Committee and tweeted that he thought of himself “as a model CEO, who wouldn’t become lazy or disconnected”.
“I’m sorry,” he said. “Hopefully people can learn from the difference between who I was and who I could have been.”
The sudden collapse of FTX impacted thousands of Australians who had funds on the exchange, and has created market conditions that recently led to one of the country’s largest exchanges Swyftx laying off a third of its staff.
Current CEO of FTX John Ray III – who is administering the company through its bankruptcy – also oversaw the infamous Enron bankruptcy.
In a statement to the same US House Committee SBF was set to appear in front of prior to his arrest, Ray said FTX was unique in just how shambolic the company’s management was.
“Never in my career have I seen such an utter failure of corporate controls at every level of an organisation, from the lack of financial statements to a complete failure of any internal controls or governance whatsoever,” he said.
“The FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people’s money or assets.”