Sam Bankman-Fried, the founder of FTX, was detained in the Bahamas on Monday at the request of American authorities, the day before he was scheduled to testify before Congress over the abrupt closure of one of the biggest cryptocurrency exchanges in the world last month.
The 30-year-old entrepreneur, commonly known by his initials SBF, rode a surge in bitcoin and other digital assets to become a multi-billionaire before FTX’s quick death. His arrest is a remarkable fall from grace.
The Bahamas-based, 2019-launched exchange filed for bankruptcy on November 11 after struggling to acquire capital to avoid collapsing as traders rushed to remove $6 billion from the platform in only 72 hours. Since then, it has come to light that Bankman-Fried hid the usage of $10 billion in customer funds for the support of his trading company.
The arrest happened just as Bankman-Fried was getting ready to confront his former attorneys at Sullivan and Cromwell, the new CEO of FTX, John Ray, and rival exchange operator Binance in front of Congress.
Bankman-Fried intended to claim in the testimony—a draft of which was obtained by Reuters—that Sullivan & Cromwell lawyers forced him to propose Ray as CEO as a result of the unexpected outflow of client monies. And when he quickly changed his mind after being offered billions in new money, he was informed that it was too late.
Congresswoman Maxine Waters, who expressed surprise after hearing of Bankman-arrest, Fried’s said in a statement that he will no longer be allowed to testify. The testimony of Ray will proceed.
Bankman-Fried was detained at his apartment complex, a posh gated enclave called the Albany, just after 6:00 pm Monday (2300 GMT), and will appear in court on Tuesday, according to Bahamian police. He is anticipated to be extradited to the United States, according to the Bahamas attorney general’s office.
While acknowledging that Bankman-Fried had been detained in the Bahamas, a spokeswoman for the Manhattan office of the U.S. Attorney declined to comment on the accusations.