FTX founder Sam Bankman-Fried turned into arrested inside the Bahamas at the behest of US prosecutors on Monday, the day earlier than he was due to testify earlier than Congress approximately the abrupt failure closing month of one of the world’s biggest cryptocurrency exchanges.

The arrest marks a beautiful fall from grace for the 30-yr-antique entrepreneur widely known by using his initials SBF, who rode a growth in bitcoin and different digital assets to end up a billionaire oftentimes over until FTX’s fast dying.

The trade, released in 2019 and based totally in the Bahamas, filed for financial ruin November 11 after it struggled to elevate money to stave off fall apart as investors rushed to withdraw $6 billion from the platform in just seventy two hours. Since then it emerged Bankman-Fried secretly used $10 billion in patron budget to prop up his trading enterprise.

The arrest got here as Bankman-Fried prepared to lash out at his former attorneys at Sullivan and Cromwell, new FTX CEO John Ray and rival alternate operator Binance at a Congressional hearing.

In the testimony, a draft replica of which became visible via Reuters, Bankman-Fried deliberate to mention he turned into forced by means of Sullivan and Cromwell lawyers to appoint Ray as CEO following the sudden exodus of consumer funds. And whilst within minutes he changed his mind, following a proposal of billions of dollars of clean funding, he changed into informed it became too late.

Bankman-Fried will now be not able to testify, according to Congresswoman Maxine Waters, who said in a statement she became surprised to listen of his arrest. Ray’s testimony will move ahead.

Bankman-Fried became arrested shortly after 6pm Monday at his condo complex, a luxury gated community called the Albany, and will seem in a Justice of the Peace courtroom on Tuesday, Bahamian police stated. The Bahamas attorney wellknown’s workplace stated it expects he may be extradited to the US.

A spokesman for the US Attorney’s office in Manhattan confirmed Bankman-Fried were arrested in the Bahamas however declined to comment on the charges.

US prosecutors said they’d a sealed indictment towards Bankman-Fried and prices could be found out on Tuesday. The New York Times mentioned he faces fraud and cash laundering prices. The US Securities and Exchange Commission separately authorized expenses relating to Bankman-Fried’s violations of securities laws, the regulator said on Monday.

Bankman-Fried and his lawyer Mark Cohen did now not right away reply to requests for remark, nor did Sullivan and Cromwell, FTX, Ray and Binance.

Bankman-Fried has stated he would not assume he has any criminal liability. “I failed to ever try to devote fraud,” Bankman-Fried stated in a November 30 interview on the New York Times’ Dealbook Summit.

Crypto Industry Reeling

FTX’s dying despatched shockwaves thru an already-battered cryptocurrency enterprise, which has seen a string of meltdowns this yr that have taken down different key gamers inclusive of Voyager Digital and Celsius Network.

More problem is probably at the horizon for the industry. Reuters pronounced Monday that some Justice Department prosecutors agree with they have got amassed sufficient proof in their lengthy-walking investigation of Binance to price the arena’s largest cryptocurrency trade and a few top executives.

A Binance spokesperson informed Reuters for the item: “We haven’t any insight into the internal workings of the US Justice Department, nor wouldn’t it be appropriate for us to remark if we did.”

Bitcoin changed into steady at $17,one hundred fifty. It is down more than 60% this yr.Since the disintegrate of FTX, Bankman-Fried has given numerous media interviews apologizing for his errors and explaining what occurred on the organization, something that legal experts said ought to permit prosecutors to factor to inconsistencies to undermine his credibility with a jury.

“The protection goes to be absolutely boxed in via the prior statements SBF has made and the very incisive questions he has replied within the press and on social media,” said crook protection attorney and previous federal prosecutor Renato Mariotti.

In his written testimony, Bankman-Fried repeated his mea culpa: “I would love to begin by means of officially declaring, below oath: I fucked up,” he wrote.

Then, he launched into an evidence of ways things went badly at FTX and his hedge fund Alameda Research, at the same time as criticizing Sullivan and Cromwell and Ray as well as arch rival Binance for their actions as his firm imploded.