Sam Bankman-Fried arrested in Bahamas on U.S. request

FTX and Bankman-Fried have been under investigation by U.S. law enforcement agencies after his company imploded in November, losing billions of dollars of its customers’ money. He was slated to testify in front of the House Financial Services Committee Tuesday.

Rep. Lee Zeldin (R-N.Y.), a member of the House panel, tweeted Monday night that his committee was “ready to grill” Bankman-Fried “six ways to Sunday.” Zeldin still wanted that opportunity: “Why not allow him to 1st testify tomorrow and answer our many questions?,” he wrote on Twitter.

Spokespeople for Bankman-Fried, the prime minister of the Bahamas, the attorney general of the Bahamas and the House Financial Services Committee did not immediately respond to requests for comment.

Bankman-Fried has spent the past few weeks in his Bahamas estate, giving numerous interviews to reporters and making dozens of social media posts trying to explain how his company went from being one of the biggest and most-respected crypto exchanges to filing for bankruptcy after it could not meet its customers’ withdrawal requests. The company owes its top creditors $3 billion, according to bankruptcy filings, and investigators have sought answers on whether it used customer funds to lend money to Bankman-Fried’s investment arm, Alameda Research.

Bankman-Fried has said he made grave mistakes but has denied any malicious wrongdoing.

The chief executive brought in to handle the restructuring, John J. Ray, has described a chaotic environment at FTX with “a complete absence of trustworthy financial information.” In prepared remarks for the congressional testimony, Ray said his initial investigation of the company showed “gross mismanagement, excessive leverage” and “failures of internal controls.”

Bankman-Fried founded FTX in 2019 as an exchange that made money by facilitating trades of cryptocurrencies and taking transaction fees. As the crypto boom unfolded and prices for bitcoin, ethereum and dozens of smaller tokens and coins exploded, the company grew to a valuation of $32 billion and received funding from major investors such as venture capital firm Sequoia and the Ontario Teachers’ Pension Plan.

As Bankman-Fried, who owned the majority of FTX, saw his own net worth balloon, he amassed political influence as well. He was the second-largest Democratic donor in the 2022 midterm elections. Before FTX’s collapse, Bankman-Fried frequented Capitol Hill, urging lawmakers to regulate the crypto industry. This put him at odds with other crypto industry leaders who oppose government intervention.

He was also a major proponent of effective altruism and longtermism — philanthropic ideologies that emphasize efficiently using money to help others and considering the impact of philanthropic projects on the lives of future humans who aren’t born yet. He also poured millions into pandemic prevention initiatives.

Many of the charities and organizations that had took money from him were left in the cold after his company collapsed and his fortune evaporated.