ARI SHAPIRO, HOST:
The founder and now former head of the cryptocurrency exchange FTX has been arrested in the Bahamas, where the company is based, at the request of the U.S. government. Bahamian police made the arrest hours before Sam Bankman-Fried was expected to appear virtually before Congress to testify about FTX's implosion.
NPR's David Gura is following this story and has the latest. David, what can you tell us about what led up to this arrest?
DAVID GURA, BYLINE: Well, the office of the attorney general in the Bahamas says in a statement that police arrested Sam Bankman-Fried earlier today after Bahamian officials received formal notification from the United States that it's filed criminal charges against him. Now, Bankman-Fried has remained in the Bahamas since FTX collapsed just one month ago. And he said repeatedly in interviews he's been cooperating with authorities there who have been doing their own investigation, trying to piece together how this company went from being valued at $32 billion to going bankrupt just a month ago that happened in a matter of days.
Couple other details we learned tonight - the U.S. and the Bahamas do have an extradition treaty, and the Bahamian attorney general noted the U.S. is likely to request Bankman-Fried's extradition, something the Bahamas promises to process promptly. And while he stressed the U.S. and Bahamian law enforcement and regulators have been cooperating, the Bahamas plans to continue its own regulatory and criminal investigations into the collapse of FTX.
SHAPIRO: Have federal prosecutors here in the U.S. said anything?
GURA: We did hear from the U.S. attorney for the Southern District of New York after the Bahamas announced this. In a tweet, U.S. Attorney Damian Williams says the arrest happened this evening. He confirmed it was at the request of the U.S. government, and it was based on a sealed indictment filed by the SDNY. Of course, now, the big question is what's in that indictment? And Williams promises we'll learn more tomorrow morning when it's unsealed. He says the office will have more to say at that time.
There's been a lot of speculation that this was a massive fraud engineered by Bankman-Fried, who founded FTX in 2019. And at the center of this collapse is FTX's relationship with a trading firm Bankman-Fried also founded called Alameda Research. What's emerged is that Bankman-Fried was moving money around in weird ways, putting customers' money at risk. And we've learned that much of that has just disappeared. So there are a lot of things he could be charged with, including fraud. Again, we'll learn more tomorrow. We've also learned the SEC has filed charges separately, violations of the securities laws, and those will also be made public tomorrow.
SHAPIRO: How does this arrest and these charges affect ongoing investigations?
GURA: Well, John Ray, who replaced Sam Bankman-Fried as FTX's CEO, has said the company has been fielding inquiries from regulators and law enforcement, not just in the U.S. but around the world. The company's headquarters is in the Bahamas, but it's really sprawling. It has a global footprint. FTX under John Ray is doing a postmortem of its own, trying to track down that missing money I mentioned. Through Chapter 11 bankruptcy proceedings, its goal is to return those lost assets to FTX customers. And then there's the work that lawmakers have undertaken to understand what happened and to hear directly, Ari, from people who were involved, including Bankman-Fried.
SHAPIRO: And what about Congress? I mentioned that he was scheduled to testify before lawmakers tomorrow.
GURA: So we don't know how this is going to unfold. But the other witness at tomorrow's House Financial Services Committee hearing is John Ray, and he's already submitted his testimony. Sam Bankman-Fried had agreed to appear virtually after Ray's testimony. The Senate Banking Committee also wanted to hear from him, and Bankman-Fried refused to appear, defying the threat of a committee subpoena. He made that announcement during a Twitter Space with some crypto skeptics earlier today.
And I mention that just to highlight how Bankman-Fried has been acting at a time when he's clearly been under the threat of arrest. You know, others in his position would have kept quiet, would have hunkered down with their lawyers. Bankman-Fried has been doing interviews. He's been participating in these online forums, Ari, maintaining all the while he has not been preoccupied with getting arrested.
SHAPIRO: I guess we'll see how that changes now that he has been arrested. NPR's David Gura, thanks a lot.
GURA: Thank you. Transcript provided by NPR, Copyright NPR.
