By Hannah Lang
(Reuters) - 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 savior of the industry.
Bankman-Fried was charged by the U.S. Securities and Exchange Commission (SEC) on Tuesday with defrauding investors in what regulators called "a house of cards," hours before he was set to appear before a magistrate in the Bahamas.
The fallen crypto entrepreneur was arrested by Bahamian authorities late on Monday at the request of the U.S. government, U.S. Attorney Damian Williams said in a statement. The Bahamian attorney general said in a separate statement the United States was likely to request his extradition.
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 repay customers. 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.
WILD HAIR, T-SHIRTS, CELEBRITY PALS
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 politicians such as former U.S. 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 decentralized 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.