FTX founder Sam Bankman-Fried arrives in Bahamas court to face fraud charges

His arrival at court comes at the same time John Ray III, the new CEO hired to guide FTX through bankruptcy, testifies on Capitol Hill about the business practices that led to the dire straits of the company.

Bankman-Fried, known as SBF, told Chief Magistrate JoyAnn Ferguson-Pratt that he would not waive his right to an extraction hearing, per the Nassau Guardian.

He is accused of diverting funds from FTX to its partner index fund, Alameda Research, and not taking enough action to protect investors from risks, according to a filed Securities and Exchange Commission complaint.

FTX collapsed and filed for bankruptcy on Nov. 11. Bankman-Fried had allegedly misused billions of dollars in client funds that were transferred to Alameda prior to the collapse.

Ray told the House Financial Services Committee on Tuesday that record-keeping under Bankman-Fried was virtually nonexistent and that the company had used QuickBooks and Slack for finances and communication.

“It’s an absence of record-keeping. Employees would communicate invoicing and expenses on Slack, which is essentially a way of communicating [in] chatrooms,” Ray told lawmakers. “They used QuickBooks — a multibillion-dollar company using QuickBooks.”

“QuickBooks?” Rep. Ann Wagner (R-MO) asked in shock.

“QuickBooks. Nothing against QuickBooks, it’s a very nice tool, just not for a multibillion-dollar company,” Ray said.

The new CEO also testified that the funds between Alameda and FTX were undeniably tied.

The company’s bankruptcy prompted investigations from the SEC, the Department of Justice, the Commodity Futures Trading Commission, and the U.S. Attorney’s Office for the Southern District of New York, as well as the House Financial Services and Senate Banking committees.

Prior to his arrest, the FTX founder refused to testify on his company’s collapse before the Senate Banking Committee. Bankman-Fried was also scheduled to testify in front of the House Financial Services Committee on Tuesday before the Monday arrest.

Bankman-Fried is expected to be charged with “wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering,” according to the New York Times.

“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto. The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws,” SEC Chairman Gary Gensler previously said in a press release.

This story is breaking and will be updated.