According to the attorney general of The Bahamas, Sam Bankman-Fried, the creator of the defunct cryptocurrency exchange FTX, has been taken into custody there.
In the nation’s capital, Nassau, he is expected to make a court appearance on Tuesday.
According to the police, Mr. Bankman-Fried, 30, was detained for “financial offences” against US and Bahamas legal regulations.
Due to FTX’s US bankruptcy filing last month, many users were unable to access their money.
A court document stated that FTX owed its 50 largest creditors over $3.1 billion (£2.5 billion).
The charge that Mr. Bankman-Fried misappropriated billions of dollars in customer money to support his investment trading firm, Alameda, is one of the most severe ones against him.
Although many experts have cautioned that it may only be a small portion of what they placed, it is unknown how much consumers who have funds in the exchange will receive back at the conclusion of bankruptcy proceedings.
In an interview earlier this month, Mr. Bankman-Fried admitted that the company had made mistakes but he wished to disassociate himself from claims of illicit activities.
“I didn’t intend for any of this to occur, and I don’t believe I committed fraud on purpose” he said.
He also refuted claims that he had known Alameda was using FTX client funds.
Customers could exchange their regular currency for cryptocurrencies like Bitcoin on the FTX market.
Cryptocurrencies are digital assets that function more like securities or investment vehicles, frequently with high levels of volatility.
Because of their anonymity, they have been used for illegal activities including drug trafficking and ransomware attacks, but their defenders claim there is tremendous potential for innovation and freedom from centralised authority.
Prior to FTX’s demise, he appeared to take great pleasure in sharing with his Twitter followers details of his personal life, which included sleeping on a beanbag next to his desk at work and playing League of Legends while on the phone, even when courting investors.
He had established a solid reputation in Washington DC as a political donor – most often to Democratic candidates or organizations – who purportedly supported stronger crypto regulation and pandemic prevention.
According to a statement from the Bahamas Attorney General, Mr. Bankman-Fried will be detained “pursuant to our nation’s Extradition Act.”
The statement added: “Samuel Bankman-Fried was taken into custody by the Bahamian authorities earlier this evening at the request of the US Government and in accordance with a sealed indictment brought by the SDNY [Southern District of New York].”
Regulators on Wall Street also announced that they would take action against Mr. Bankman-Fried.
According to US Securities and Exchange Commission (SEC) officer Gurbir Grewal, “We thank our law enforcement partners for working to achieve the arrest of Mr Sam Bankman-Fried in the Bahamas on federal criminal charges.”
“Mr. Bankman-Fried’s violation of our securities laws have been independently authorised charges, which will be filed publicly tomorrow in the Southern District of New York,” he continued.