Prosecutors reopen crypto exchange fraud charges in Bahamas

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Prosecutors reopen crypto exchange fraud charges in Bahamas

Prosecutors have reopened the charges and will tell Congress what went wrong at the exchange.

One month after FTX, the No. 2 crypto exchanges worldwide, including the Bahamas, collapsed amid allegations of self-dealing, police in the Bahamas arrested its co-founder and former CEO, Sam Bankman-Fried, at the request of U.S. prosecutors.

In a tweet Monday, Damian Williams, the U.S. attorney in Manhattan, said Bahamanian officials acted on his office's request and that prosecutors plan to unseal an indictment Tuesday morning against the 30-year-old entrepreneur.

The island nation's attorney general said it was not yet clear what the island's attorney general did.

The office said it will Promptly process Bank-Fried's extradition to the United States.

He plans to describe how FTX did not maintain records of its transactions, and 'comingled assets' between the exchange and Alameda Research, the crypto hedge fund Bankman-Fried also controlled.

Chief executive Ray Ray said senior management had access to stored customer assets such as crypto tokens without security controls to prevent redirecting those assets. He also plans to provide details on how Alameda borrowed funds held at FTX for its own trading or investments without effective limits and had a lack of documentation for transactions involving almost 500 investments made with FTX's assets and assets.

The Securities and Exchange Commission is also expected to file a lawsuit against Bankman-Fried on Tuesday.

The quickness of criminal action in the FTX case is a defining moment for our nation. It was only in early November that the collapse of the exchange rocked the crypto world as one of its most prominent players filed for bankruptcy and converted up to 1M customers into creditors.

The problem of FTX and Alameda came under scrutiny after news broke that 40 percent of the hedge fund's balance sheet relied on FTX's homegrown token, FTT. The revelation raises questions about Alameda's financial position and led Binance to announce it was preparing to sell off $500M worth of FTT, which it acquired as an early investor ion FTX. The move caused a wave of withdrawals from FTX, leaving it effectively insolvent.

FTX filed for Chapter 1d1 bankruptcy and SBF resigned as CEO on Nov. 11 after 10B in customer assets were identified as missing from the platform.

Bankman-Fried has said in numerous media interviews that he did not knowingly defraud customers but made honest mistakes.