Sam Bankman-Fried’s Arrest May Have Blocked Incriminating FTX Testimony

FTX founder Sam Bankman-Fried’s sudden arrest on Monday night halted a scheduled testimony that legal experts say could have been damning for the crypto industry and its former golden boy.

A day before Bankman-Fried was expected to appear remotely before the House Financial Services Committee in a hearing about the collapse of crypto giant FTX, the 30-year-old was arrested in the Bahamas after U.S. prosecutors filed criminal charges.

FTX, a digital currency exchange, was one of the most powerful firms in the industry until it imploded almost overnight in what some have called crypto’s “Lehman moment.”

Although Tuesday’s congressional hearing went on as planned, the absence of the disgraced founder, who was also a major donor to the Democratic Party, was criticized by Republican lawmakers who hinted that federal authorities purposely blocked his testimony. Even progressive congresswoman Maxine Waters, who chairs the committee, expressed her upset with Monday’s development, saying, “the timing of this arrest denies the public” the opportunity to hear directly from Bankman-Fried while he was under oath.

Legal experts say that while the arrest was made by Bahamian authorities, rather than U.S. law enforcement, such a move should have waited until after Bankman-Fried’s scheduled testimony.

Former federal prosecutor and elected state attorney Michael McAuliffe told Newsweek that federal officials might have actually gained valuable information from the testimony, which would have been under oath and addressed the very issues being investigated by the Justice Department.

Former federal prosecutor Neama Rahmani also told Newsweek that because Bankman-Fried is known to ignore legal advice, the FTX founder would have likely incriminated himself before the House committee, increasing the chances that he would plead guilty after an arrest.

“Most people would have refused to testify before Congress when there is a pending criminal investigation, but Bankman-Fried is not most people. He marches to the beat of his own drum, and also ignores legal advice,” Rahmani said. “Testimony would have been helpful for a number of reasons, and prosecutors should have waited to arrest Bankman-Fried.”

Rahmani said because the…