It took a month: Sam Bankman-Fried, 30, the founder of the bankrupt cryptocurrency empire FTX, was arrested on Monday, December 12 in the Bahamas where he resided.
“Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the US government, based on a sealed indictment filed by the Southern District of New York. We plan to unseal the indictment in the morning and we will have more to say at that time”, announced, on Twitter, one of the federal prosecutors of New York, Damian Williams.
This arrest comes four weeks after the collapse of FTX. The cryptocurrency exchange, which was considered one of the most secure on the planet, went bankrupt within days after one of its competitors, industry leader Binance, decided to withdraw its funds . It then transpired that FTX was lending its clients’ capital to Alameda, a Bahamian-based company controlled by Sam Bankman-Fried, which had engaged in the craziest speculative bets.
Mr. Bankman-Fried, taking advantage of the particularly flexible regulation of the Bahamas, had made use of it personally: according to the wall street journalhe had benefited from a personal loan of 1 billion dollars (950 million euros) while one of his lieutenants had borrowed from FTX 543 million dollars.
Billions of dollars gone up in smoke
The fine team of young cryptocurrency fanatics lived in a luxury shared apartment in Nassau, the capital of the Bahamas, worth an estimated $30 million. Everything was mixed up in this world: Sam Bankman-Fried, 30, son of Stanford professors in California, had a girlfriend, Caroline Ellison, 28, managing director of the hedge fund Alameda. No separation between activities was organised.
This mushroom empire, which was valued at $32 billion a few months ago in its last round with investors, had no serious internal controls. It collapsed with the fall of bitcoin and cryptocurrencies, which suffered the bursting of the stock market bubble on Wall Street.
The absence of regulation in this obscure world, the non-existence of a board of directors worthy of the name, despite the prestigious names in finance who had financed FTX, only made the disaster worse: billions dollars went up in smoke.
The arrest comes on the eve of testimony before the United States Congress of John Ray, provisional administrator of the FTX empire and who presided over the final destinies of Enron, an energy trading company that fell into fraudulent bankruptcy in 2001.
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