The former FTX CEO Sam Bankman-Fried has been arrested in the Bahamas, according to the country's attorney general, who also stated that the Bahamas has received formal communication from the US of criminal charges against him.
Bankman-Fried was scheduled to appear remotely before the House Financial Services Committee on Tuesday before his arrest was revealed.
It is as yet unclear whether his appearance will go ahead following the arrest. The committee will also hear from FTX's new CEO, John Ray III.
Ray confirmed media reports that FTX client funds were pooled together with Alameda Research assets. Alameda utilized customer funds to perform margin trading, which exposed them to enormous losses, Ray said.
According to the New York Times, which cited a source with knowledge of the situation, the charges include money laundering, securities fraud, wire fraud, and conspiracy to commit securities fraud.
The U.S. Attorney for the Southern District of New York, Damian Williams, announced on Twitter that the indictment would be released the following morning.
The Royal Bahamas police confirmed his arrest and said he would appear in magistrate court in Nassau on Tuesday. Bahamas Attorney General Ryan Pinder said that the United States was "likely to request his extradition."
Last month, FTX filed for U.S. bankruptcy protection, and Bankman-Fried resigned as CEO, sparking a wave of public calls for stronger regulation of the cryptocurrency business.
As traders rushed to remove $6 billion from the site in only 72 hours, the beleaguered crypto trading platform scrambled to secure funds to avoid collapse, and rival exchange Binance abandoned a proposed rescue deal.
U.S. authorities have requested information from FTX investors and potential investors in recent weeks, according to two sources familiar with the requests.
In chambers and in the court of public opinion, Bahamian regulators and FTX's attorneys have been fighting major confrontations. Earlier on Monday, representatives for FTX claimed that Bankman-Fried and the Bahamian government had conspired to move FTX assets out of the hands of the company and into cryptocurrency wallets under the supervision of Bahamian officials.
The Bahamas and the U.S. will likely continue to work closely together throughout the bankruptcy processes, as seen by Bankman-Fried's arrest by Bahamas law authorities and his anticipated extradition.
Since the early 20th century, when the Bahamas was still under British administration, the Bahamas and the U.S. have had an extradition treaty in effect. The current treaty, which was signed in 1990, requires the seeking party to present an arrest order issued by a judge or "other competent authority."
