The CEO of the cryptocurrency exchange FTX, Sam Bankman-Freid arrested by the Bahamas law enforcement
FTX CEO Sam Bankman-Fried arrested by Bahamas law enforcement after allegations of fraud. Exchange and investment firm collapse led to $100 million in damages. Regulatory action taken regarding improper use of customer funds. Bitcoin price drop in 2022 contributed to industry challenges.
After a couple of months of investigations, Sam Bankman-Fried, the CEO of once the third largest cryptocurrency exchange the FTX, is arrested in the Bahamas by local law enforcement. The FTX trading platform was established in the Bahamas with the headquarters in the US from where they run their operations. Earlier this year, the FTX exchange and its proxy investment firm Alameda Research collapsed under a series of bad financial decisions and revelations of insolvent balance sheets, creating almost $100 million in damages for its customers. The FTX’s CEO is now being charged by the US Security and Exchange Commission for orchestrating a scheme to defraud investors.
In an interview for ABC news, Sam Bankman-Fried said he didn’t know that “there was any improper use of customer funds.” The SEC’s complaint published on December 13, claims that ‘since at least May 2019, FTX, based in The Bahamas, raised more than $1.8 billion from equity investors’. “We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” said the SEC Chair Gary Gensler.
The fall of the large cryptocurrency funds started in summer 2022, when the nominal price of the bitcoin cryptocurrency fell from an all-time high of $67.000 to $18.000. This had a ripple effect on cryptocurrency exchanges and the rest of the cryptocurrency industry that collateralised almost all funds in bitcoin.