Sam Bankman-Fried, the founder of FTX, was detained by Bahamian authorities this evening after the Southern District of New York US Attorney shared a sealed indictment with them, paving the way for his extradition and eventual trial in the US. He was the driving force behind the collapse of the crypto exchange.
Tuesday's hearing before the House Financial Services Committee was scheduled to feature testimony from Bankman-Fried. His arrest marks the authorities' first significant step towards holding those accountable for the multibillion-dollar collapse of FTX last month.
In November, FTX and its affiliates filed for bankruptcy, and Bankman-Fried stepped down from his role as CEO. The crypto trading firm imploded spectacularly following a run on assets similar to a bank run.
FTX’s collapse was precipitated when reporting from CoinDesk revealed a highly concentrated position in self-issued FTT coins, which Bankman-Fried’s hedge fund Alameda Research used as collateral for billions in crypto loans. Binance, a rival exchange, announced it would sell its stake in FTT, spurring a massive withdrawal in funds. The company froze assets and declared bankruptcy days later. Reports later claimed that FTX had commingled customer funds with Bankman-Fried’s crypto hedge fund, Alameda Research and that billions in customer deposits had been lost along the way.