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Editing by Nathaniel Cajuday
The founder of the controversial FTX crypto exchange, Sam Bankman-Fried, has been arrested by Bahamian authorities in relation to the collapse of the exchange, a CNBC report revealed. Although the Bahamas government declined to disclose his charges, stated that the authorities had received formal notification from the United States of criminal charges against him.
“As a result of the notification received and the material provided therewith, it was deemed appropriate for the Attorney General to seek SBF’s arrest and hold him in custody pursuant to our nation’s Extradition Act,” the office of The Bahamas Attorney General Ryan Pinder said.
The arrest is the first move by regulators to hold those accountable for the multi-billion dollar implosion.
Bahamian regulators are said to be working with the US, who are likely to request Bankman-Fried’s extradition to face trial in the US. Prior to this, FTX attorneys earlier accused the Bahamian government of working with Bankman-Fried to move FTX assets out of the company and into crypto wallets controlled by Bahamian regulators.
In the Philippines, local authorities were also alerted by this collapse that even the Bangko Sentral ng Pilipinas (BSP) asked locally licensed cryptocurrency exchanges about their exposure to FTX. The central bank stated that the initiative is to closely monitor the situation and to ensure that local exchanges have adequate protection against any potential losses. (Read more: Report: BSP Asks Local VASPs of FTX Exposure, Exchanges Respond)
In addition, the BSP also issued a reminder about the importance of keeping virtual assets safe. The central bank noted that Companies that provide services related to virtual assets must make sure customer funds are safe and not being used for other purposes and that these entities must have enough reserves to cover the virtual assets they hold, and to keep customer and company funds separate. (Read more: BSP to Licensed Crypto Exchanges: Don’t Misuse User Funds)
Timeline of FTX Collapse
The crash of one of the biggest exchanges in the world was triggered by a CoinDesk article, which happened last month. The report revealed that a large portion of the fund of Alameda Research, which was also owned by Bankman-Fried, was made up of its own FTX tokens. It was also found that the company had violated its own terms and conditions by mixing funds.
Following this, its rival Binance announced that it will liquidate its FTT holdings–which stirred up allegations that the exchange was working to make FTX fall, Binance CEO Changpeng Zhao denied conspiracy allegations and even signed a non-binding agreement to acquire the firm.
However, Binance eventually dropped the bid because they deemed that “the issues are beyond our control or ability to help.” (Read more: What Happened? BlockFi Files for Bankruptcy Amid FTX Crypto Contagion)
Being unable to satisfy a wave of customer withdrawals, FTX filed for bankruptcy, and Bankman-Fried stepped down from his position. Consequently, the new chief executive of FTX stated that the firm’s financial reporting is untrustworthy. He also described Bankman-Fried and his colleagues as “potentially compromised” as FTX may have used software to conceal the misuse of customer funds.
In a November 30 interview at the New York Times’ Dealbook Summit, Bankman-Fried reiterated that he “didn’t ever try to commit fraud,” noting that he does not personally think he has any criminal liability.
However, as Reuters reported, Bankman-Fried secretly transferred $10 billion in FTX client funds to affiliated trading firm Alameda Research—which he deemed as a misreading of the “confusing internal labeling.”
Last week, Bankman-Fried said he was “willing to testify,” and just hours later, Maxine Waters, chair of the US House committee on financial services, announced Bankman-Fried’s participation in the first hearing on the topic scheduled for December 13.
- Just House Cleaning: Binance To Liquidate Own FTX Tokens
- BREAKING: Binance Signs Deal to Acquire FTX Exchange
- FTX Token Price Drops 80% as News of Binance Buying FTX Surface
- Binance CEO Denies FTX Conspiracy
- Binance Will No Longer Acquire FTX
- What Happened? BlockFi Files for Bankruptcy Amid FTX Crypto Contagion
- Report: BSP Asks Local VASPs of FTX Exposure, Exchanges Respond
This is a developing story.
This article is published on BitPinas: BREAKING: FTX Founder Sam Bankman-Fried Arrested
Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.