SBF arrested in Bahamas, criminally indicted in New York, charged by SEC

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The Attorney General of the Bahamas has announced the arrest of Sam Bankman-Fried (SBF). The FTX founder is being detained by the Royal Bahamas Police and awaits criminal extradition to the United States.

The US Attorney for the Southern District of New York confirmed the arrest on Monday and its intent to unseal the criminal indictment on Tuesday. In addition to criminal charges, the Securities and Exchange Commission (SEC) is also charging SBF on civil charges of securities violations.

FTX and over 130 affiliated entities filed for bankruptcy on November 11. Withdrawals for millions of customers have been suspended for a month.

USA Damian Williams: Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government, based on a sealed indictment filed by the SDNY. We expect to move to unseal the indictment in the morning and will have more to say at that time.
— US Attorney SDNY (@SDNYnews) December 12, 2022

At a recent New York Times conference, SBF insisted that he “did not ever try to commit fraud” nor knowingly use customers’ deposits to finance other trades. However, the testimony of the current CEO of FTX in bankruptcy, John J. Ray III, specifies that customer assets from FTX.com were, in fact, commingled with Alameda — and that Alameda traded using those client funds.

SBF gets arrested while crypto exchanges flounder

Amid the cascading bankruptcies of FTX, BlockFi, Voyager, Three Arrows Capital, Terraform Labs, Celsius, and many others, customers are understandably asking which exchange is next. Despite opaque efforts by centralized exchange CEOs to conduct so-called Proof of Reserves attestations, many questions about liabilities and liquidity remain.

People in my comments: “Binance did Proof of Reserves”

The Proof of Reserves: “Mazars said it performed its work using “agreed-upon procedures” requested by Binance and that “we make no representation regarding the appropriateness” of the procedures.”

🤡https://t.co/SAA44SmKjq
— Travis Kling (@Travis_Kling) December 10, 2022

Proof of Reserves are not audits and do not contain Proof of Liabilities.

Following the lead of Bitcoin’s Proof of Keys day — an annual reminder from Bitcoiners since January 2019 to keep bitcoin off exchanges, in self-custody — more investors than ever are taking back possession of their assets.

Indeed, November experienced an all-time record value of withdrawals from centralized exchanges. Over 91,000 bitcoin worth almost $1.5 billion were pulled from the likes of Coinbase, Kraken, and Binance. On Monday alone, $900 million in assets were withdrawn by customers from Binance.

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