Bahamian authorities arrested former FTX founder and CEO Sam Bankman-Fried Monday evening.
The development comes one day before Bankman-Fried had agreed to testify before the U.S. House Financial Services Committee regarding the collapse of his Nassau-based exchange.
According to a statement shared by the Bahamian Office of the Attorney General & Ministry of Legal Affairs, the Royal Bahamas Police detained Bankman-Fried following receipt of formal notification from the United States it has filed criminal charges against the fallen crypto billionaire.
The Attorney General said it will hold Bankman-Fried in custody pursuant to the Bahamas' extradition treaty. The U.S government's extradition treaty with the Bahamas lets the U.S. extradite defendants for charges involving offenses that are crimes in both countries.
"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," Damian Williams, U.S. Attorney for the Souther District of New York said in a statement. "We expect to move to unseal the indictment in the morning and will have more to say at that time."
"The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law," Bahamas Prime Minister Philip Davis said in a statement.
"While the United States is pursuing its own criminal charges against SBF individually, The Bahamas will continue its own regulatory and criminal investigations into the FTX collapse, with continued cooperations of its law enforcement and regulatory partners in the United States and elsewhere."
A spokesman for the U.S Attorney’s Office, Southern District of New York declined to comment further on the criminal investigation.
Separately, the U.S. Securities and Exchange Commission has authorized charges related to Bankman-Fried’s violation of securities laws set to be unsealed tomorrow, according to a statement from the SEC.
U.S. House Financial Services Committee Chairwoman Maxine Waters (D-CA) expressed mixed feelings on the arrest's timing, which came just hours before the Committee's chance to hear Bankman-Fried answer questions under oath.
"The public has been waiting eagerly to get these answers under oath before Congress, and the timing of this arrest denies the public this opportunity," Waters said in a statement. FTX's current CEO, John Ray III, will still testify before the Committee.
Since FTX filed for bankruptcy protection on November 11, Bankman-Fried’s public statements have painted his involvement in the crypto exchange's demise as mismanagement or negligence.
"I don’t have the answer in front of me. I wasn’t involved much in this process," he said during a Monday interview over Twitter when faced with a string of questions about how FTX valued customer collateral positions.
Bankman-Fried has also made numerous media appearances and continued to tweet regularly about FTX since being ousted from his position with the company last month. In his highest-profile media appearance since FTX's collapse last month, Bankman-Fried told The New York Times his public comments were being made against the advice of his legal counsel.
In prepared testimony published ahead of Tuesday's hearing, Ray outlined several "unacceptable management practices" the new CEO has uncovered so far at the bankrupt crypto exchange.
Ray, who led the liquidation of Enron, also verified at least five ways FTX had been spending its money, including commingling customer assets with its trading arm, Alameda Research. When FTX filed for bankruptcy, the company reported an $8 billion asset hole.
As Yahoo Finance reported, knowledge, or lack thereof, as to how the crypto platform handled its customers’ funds — as well as other funds — will ultimately determine whether Bankman-Fried, or other decision makers from the now bankrupt firm, will face civil claims or criminal accusations tied to the collapse
David Hollerith is a senior reporter at Yahoo Finance covering the cryptocurrency and stock markets. Follow him on Twitter at @DsHollers
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