Bankman-Fried arrested by U.S. prosecutors

Key points:

• Sam Bankman-Fried has been arrested in the Bahamas, according to a statement from the Royal Bahamas Police Force.
• He was arrested after "the United States received formal notification that it has brought criminal charges against SBF and may seek his extradition," a statement said.
• The charges are expected to be unsealed tomorrow morning and there will be more to say at that time.
• The statement said SBF's arrest was due to "various financial practices that violate the laws of the United States, which also constitute violations of the laws of the Commonwealth of the Bahamas."
• It's unclear what charges U.S. authorities intend to bring against Bankman-Fried, but legal experts told it was likely a combination of bank fraud and wire fraud. 

Disgraced former FTX CEO Sam Bankman-Fried has been arrested in the Bahamas, according to a statement from the Royal Bahamas Police Force.

Bankman-Fried, also known as SBF, was arrested after "the United States received formal notification that it has brought criminal charges against SBF and may seek his extradition," a statement said.

The U.S. Attorney's Office for the Southern District of New York confirmed the request in a statement via Twitter.

"Tonight, at the request of the United States government, Bahamian authorities arrested Samuel Bankman-Fried pursuant to a sealed SDNY indictment," it said. "We expect the charges to be unsealed tomorrow morning and there will be more to say at that time."

Bahamian police confirmed in a statement that law enforcement successfully apprehended Bankman-Fried at 6 p.m. In his apartment complex in Albany. The statement said SBF's arrest was due to "various financial practices that violate the laws of the United States, which also constitute violations of the laws of the Commonwealth of the Bahamas."

Bankman-Fried is scheduled to meet with lawmakers tomorrow in Washington, D.C. spoke about the digital asset exchange's debacle after agreeing to testify before the House Financial Services Committee but declining a Senate invitation.

It's unclear what charges U.S. authorities intend to bring against Bankman-Fried, but legal experts told it was likely a combination of bank fraud and wire fraud. The Bahamas has an extradition treaty with the United States.

FTX went bankrupt last month after funds from the exchange were allegedly mixed with its trading firm Alameda Research (also founded by SBF).

When users of the exchange realized the mismanagement, they attempted to withdraw funds from FTX, causing a bank run on the exchange. Subsequently, FTX was forced to admit that it did not hold a one-to-one reserve of client assets and subsequently filed for bankruptcy.

The company's new CEO, John J. Ray III, a seasoned bankruptcy lawyer who helped him after the Enron collapse, said today that FTX's collapse was the result of "a very small number of extremely caused by individuals with inexperience and skills".

The comments came in the form of prepared testimony that Wray plans to present to the House Financial Services Committee tomorrow morning. In that statement, Ray detailed problems at FTX and its sister company Alameda, including the commingling of funds, a lack of reliable financial statements, and the "use of computer infrastructure" to give company executives access to client assets.

According to Ray, Alameda also has an unaudited ability to borrow funds from FTX for its own purposes.