Sam Bankman-fried has been arrested in the Bahamas on Monday making the beginning of a new chapter in the FTX saga, one that will pit the former crypto billionaire against the southern district of New york.
The indictment is expected to remain sealed until Tuesday morning. U.S. prosecutors have not commented and neither the attorney general of the Bahamas nor the Royal Bahamas Police force would confirm the nature of the charges against Bank man-fried.
Bankman-Fried has denied knowingly commingling funds and sought to distance himself from the day-to-day management of Alameda, which made a number of high-risk trading strategies such as arbitrage and “yielding farming”, aka investing in digital that pays interest-rate-like rewards. Bankman-Fried has admitted to mismanaging FTX and not paying enough attention to risk. Bank-Fried has also acknowledged the lack of corporate controls and risk management within the businesses he oversaw
One of the key questions about FTX’s collapse from a Reuters report last month that says Bankman-Fried made a Backdoor into FTX’s accounting system, allowing him to alter the company’s financial records without tripping accounting red flags the report said Bamma-Fried used this “backdoor” to transfer $10 billion in FTX customer funds to Almeda, the hedge fund and at least $1 billion is now Missing.
Bankman-Fried has denied knowledge of any such backdoor. “I don’t even know how to code”, he told crypto currency vlogger tiffany fong in an interview last month.
Other Legal Trouble
Apart from the criminal charges set to be unveiled Tuesday morning, Bankman-Fried is also facing civil action, which could be brought by the SEC, the commodity futures trading commission, and state banking and securities regulator said Richard Levin, who chairs the fintech and regulators
The CFTC and lawmakers have begun their probes into FTX and Bankman-Fried, who told working he was down to his last $100,000.
Shortly after that, the SEC appeared to confirm that the agency would pursue a distinct set of charges from the criminal indictment.
An Effort to Extradite
The U.S. and the Bahamas have had an extradition treaty in place since 1931, with the most recent iteration codified in 1990. Because Bankman-Fried hasn’t been convicted in the Bahamas yet, U.S. prosecutors had to secure an arrest warrant and provide sufficient evidence to the Bahamians that he had committed a crime.
Extradition is the first step in a process that could take years to finish. Given the magnitude of Bankman-Fried’s alleged crimes, prosecutors and regulators will be pursuing concurrent cases around the world.