FTX Founder Sam Bankman-Fried Arrested in Bahamas, U.S. Likely to Seek Extradition

Mr. Bankman-Fried was scheduled to testify before Congress on Tuesday in a hearing probing the collapse of FTX last month, a development that appears to have resulted in the loss of billions of dollars of customer funds. It wasn’t clear Monday evening whether he would appear.

The arrest was made based on a sealed indictment filed by the U.S. attorney’s office for the Southern District of New York, the U.S. attorney said. “We expect to move to unseal the indictment in the morning and will have more to say at that time,” said U.S. Attorney

Damian Williams

in a statement.

The U.S. is likely to request Mr. Bankman-Fried’s extradition, according to a release issued by the Office of the Attorney General of the Bahamas. He will be held in custody by Bahamian police pursuant to the country’s extradition law, the release says.

“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,” Bahamian Prime Minister Philip Davis said in a statement.

Mr. Bankman-Fried has remained in the Bahamas since his company filed for bankruptcy. He moved FTX’s headquarters to Nassau, the capital of the Bahamas, from Hong Kong in 2021.

The Justice Department and the Securities and Exchange Commission have been investigating the company and have been in contact with company officials, The Wall Street Journal previously reported.

FTX experienced massive withdrawals as customers grew worried about its financial health this fall, and reports surfaced that the company had lent billions of dollars in customer assets to fund risky bets by Alameda Research, a crypto hedge fund controlled by Mr. Bankman-Fried.

Mr. Bankman-Fried has made a number of public appearances in recent weeks, and he has denied knowingly commingling customer funds with FTX’s own.

Mr. Bankman-Fried has been reportedly cooperating with Bahamian authorities since early November. A Bahamian court appointed liquidators to wind down FTX Digital Markets Ltd., a local subsidiary that housed FTX’s international exchange.

John J. Ray III, FTX’s new chief executive, said in testimony prepared for Tuesday’s hearing that FTX’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.”

They failed to implement controls “that are necessary for a company that is entrusted with other people’s money or assets,” Mr. Ray wrote.

Write to Alexander Saeedy at [email protected] and Vicky Ge Huang at [email protected]