FTX ex-CEO’s sudden turn from white knight to detainee

WASHINGTON/NEW YORK: The sudden fall from grace and arrest of FTX’s former CEO Sam Bankman-Fried has stunned investors and crypto enthusiasts who once hailed the 30-year-old American as the saviour of the industry.

Bankman-Fried was arrested by Bahamian authorities at the request of the US government, US Attorney Damian Williams said in a statement. The Bahamian attorney general said in a separate statement the US is likely to request his extradition.

Multiple federal agencies are also investigating how the exchange handled customer funds while he was in charge.

Bankman-Fried amassed billions of dollars in personal wealth running FTX, one of the world’s largest crypto exchanges that was valued earlier this year at $32 billion.

Since stepping down Bankman-Fried, has said he no longer has a role at the company. Yet he also told a Vox reporter he believed FTX’s bankruptcy filing was a mistake and has suggested on Twitter and in media interviews that he can still raise liquidity to make customers whole. He did not specify how he planned to do so.

FTX appointed restructuring expert John Ray as CEO after Bankman-Fried stepped down on Nov 11, shortly before filing for bankruptcy. Ray oversaw the liquidation of Enron, the energy trading giant that collapsed in scandal and bankruptcy in 2001.

Known in financial circles by his initials, SBF, Bankman-Fried had become a prominent and unconventional figure known for his wild hair, t-shirts and shorts. He appeared on panels with celebrity statesmen such as former US President Bill Clinton and former British Prime Minister Tony Blair as well as with supermodel Gisele Bundchen.

Bankman-Fried contributed $5.2 million to President Joe Biden’s 2020 campaign and became one of the largest donors to Democratic political candidates.

“Nobody was saying that anything was wrong with SBF,” said Marius Ciubotariu, co-founder of the Hubble protocol, a decentralised lending platform.

The collapse of FTX caught markets by surprise because Bankman-Fried was seen as a business-savvy founder adept at striking deals, he said.

The one-time crypto wunderkind was raised in California by two Stanford University law professors, Joseph Bankman and Barbara Fried. Bankman-Fried started his career at Jane Street Capital, a choice he has said was influenced by a desire to make money to pursue his interest in effective altruism, a movement that encourages people to prioritize donations to charities.