Image Source: Bloomberg
Sam Bankman-Fried, the founder of FTX has been arreseted and arraigned before a judge in the Bahamas.
He is due to go to a magistrates’ court in Nassau, the capital of the Caribbean country, on Tuesday.
Police said Mr. Bankman-Fried, who is 30 years old, was arrested for “financial offenses” against US and Bahamas laws.
Last month, FTX filed for chapter 11 bankruptcy in the US. Unfortunately, this made it hard for many users to get their money back.
A court ruling said that FTX owed its 50 biggest creditors almost $3.1 billion (£2.5 billion).
One of the worst things said about Mr. Bankman-Fried is that he used billions of dollars from his customers to keep his investment trading company, Alameda, going.
People who have money in the exchange are still determining how much they will get back at the end of the bankruptcy process, but many experts have warned that it may be only a small part of what they put in.
In an interview with the BBC earlier in December, Mr. Bankman-Fried admitted that mistakes were made at the company, but he tried to get away from claims that illegal things were done.
He also denied that he must have known that Alameda was using FTX customer funds, which was another accusation.
People could trade regular money for cryptocurrencies like Bitcoin on the FTX exchange.
Cryptocurrencies are not currencies in the traditional sense. Instead, they are stored online and act more like investment vehicles or securities with high volatility.
Because they are anonymous, criminals like to work with them to sell drugs and launch ransomware attacks. Still, people who support them say there is much room for innovation and freedom from governments.
Mr. Bankman-Fried used to be seen as a younger version of legendary US investor Warren Buffett. As recently as October, his net worth was estimated to be more than $15bn.
Before FTX went down, he seemed happy to tell his Twitter followers about his life, including playing League of Legends on the phone, trying to get investors to invest, and sleeping on a beanbag beside his desk at work.
In Washington, DC, he was well-known as a political donor, primarily to Democratic politicians or groups. He was said to support preventing pandemics and making crypto regulations better.
Wall Street officials also said that they would do something about Mr. Bankman-Fried.
On Tuesday, Sam Bankman-Fried was supposed to talk to the US Congress about why FTX failed.
Congresswoman Maxine Waters said in a statement that she was surprised to hear that he had been arrested and would no longer be able to testify.
When the BBC asked Mr. Bankman-lawyer Fried for a comment, the lawyer did not answer immediately.
Gary Wang, a former Wall Street trader and Google employee started FTX, which owns and runs the FTX.COM cryptocurrency exchange, in 2019.
It became the second largest cryptocurrency exchange in the world, trading about $10 billion worth of cryptocurrencies daily.
But on November 11, FTX filed for bankruptcy after users took $6 billion out of the platform in three days and a rival exchange, Binance, backed out of a plan to save it. At the same time, Sam Bankman-Fried gave up his position as CEO of FTX.
The cryptocurrency industry had a rough year when FTX went out of business. This year, the value of Bitcoin and other cryptocurrencies has dropped by more than 60%.
Sam Bankman-Fried bail denied
A judge in the Bahamas said no to bail for Sam Bankman-Fried on Tuesday.
On Tuesday, the US government said that Mr. Bankman-Fried had committed “one of the biggest financial frauds in US recent history.”
Gary Gensler, head of the Security and Exchange Commission (SEC), said that the former head of FTX built a “house of cards on a foundation of lies.”
Sam Bankman-Fried said he would fight being sent to the United States.
Read Also: Sam Bankman-Fried hopes to refund FTX users
Bahamas Chief Magistrate JoyAnn Ferguson-Pratt turned down his request to be released on bail because he had a “great” chance of running away. Instead, she said he should stay in jail until February 8.
On Monday, he was picked up in the Bahamas.
Last month, FTX filed for bankruptcy in the US. Unfortunately, this made it hard for many users to get their money back. A court filing said that the crypto company owed its 50 biggest creditors almost $3.1 billion (£2.5 billion).
One of the worst things said about Mr. Bankman-Fried is that he used billions of dollars from his customers to keep his investment trading company, Alameda, going.
People who have money in the exchange are still determining how much they will get back at the end of the bankruptcy process, but many experts have warned that it may be only a tiny part of what they put in.
In the US, Sam Bankman-Fried is charged with eight crimes: wire fraud, money laundering, and conspiracy to defraud. He is also being sued in civil court for deceiving investors who put more than $1 billion into the company.
Officials have also said that he broke laws about how to pay for a campaign.
Damian Williams, the Attorney for the New York Southern District, said at a news conference on Tuesday that the fraud Mr. Bankman-Fried is accused of is one of the biggest in US history.
Mr. Williams also said that Sam Bankman-Fried had scammed lenders, investors, and customers. He also noted that Mr. Bankman-Fried had used “tens of millions” of dollars from illegally made money to give illegal campaign contributions to Democrats and Republicans.
