Bankman-Fried Arrest Day Before Congress Testimony Raises Eyebrows

Former FTX CEO Sam Bankman-Fried won’t appear before Congress on Tuesday after all, considering his arrest, disappointing the head of the House Financial Services Committee and piquing curiosities across crypto.

Committee chair Maxine Waters said Monday she was “surprised” to hear Bankman-Fried had been apprehended. Bahamian authorities arrested the former crypto billionaire on sealed charges at the request of the US Attorney for the Southern District of New York at 6:00 pm local time on Monday. 

Bankman-Fried is to be held in custody in line with the Bahamas Extradition Act.

“It’s about time the process to bring [Bankman-Fried] to justice has begun,” Waters said in a statement. “However, as the public knows, my staff and I have been working diligently for the past month to secure [Bankman-Fried’s] testimony before our Committee tomorrow morning.”

Bankman-Fried’s absence will only extend the wait for on-the-record, public answers about his involvement in the fall of his own crypto empire. While he must be held accountable for his actions, the American public deserves to hear directly from the former CEO, Waters said. 

Lawyers estimate up to one million FTX creditors around the world are impacted by its bankruptcy, although how many are US-based is unclear.

Waters threatened Bankman-Fried with subpoena to front Congress

Earlier this month, Waters encouraged Bankman-Fried to testify before a Financial Services committee.

“We appreciate that you’ve been candid in your discussions about what happened at FTX,” Waters tweeted. “Your willingness to talk to the public will help the company’s customers, investors and others.”

Bankman-Fried responded to Waters’ request two days later, where he said he’d testify once learning exactly what happened with FTX, but was uncertain if he’d be ready in time for the hearing.

Following criticism for not outright serving Bankman-Fried a subpoena to testify, the US representative for California’s 43rd congressional district shot back, claiming one was “definitely on the table.” 

Bankman-Fried later acquiesced, claiming he would appear virtually on Tuesday. “… As the committee still thinks it would be useful, I am willing to testify on the 13th,” he tweeted.

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But the timing of his arrest — on the day before his supposed appearance before Congress — has industry watchers (and social media) wondering whether coincidence or coordination is to blame.

“An arrest has always been suspected,” Sheila Warren, CEO of the Crypto Council for Innovation told Blockworks in a statement. “What’s interesting is the timing — right before two Congressional hearings.”  

The speed at which authorities filed charges against Bankman-Fried, however, likely indicates regulators had received information from cooperating witnesses, the New York Times reported Monday citing sources familiar with the matter.

The SEC separately charged Bankman-Fried with defrauding FTX’s equity investors on Tuesday, of which around 80 were based in the US. Tuesday on Tuesday. They together contributed more than $1.1 billion to Bankman-Fried ventures, the SEC said, representing about 60% of all funds he’d raised.

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