Speaking about the lack of corporate governance at the FTX group, CEO John Ray III says he has never seen such a lack of paperwork.

Explaining that there was no independent board of directors, Ray also adds there was "absolutely no internal controls whatsoever" at the firm to prevent the collapse.

"We've lost $8bn of customer money. So, by definition, I don't trust a single piece of paper in this organisation," Ray says.

In a later question, Ray tells the US congressional committee that the company does not currently know where all of its cryptocurrency wallets - where digital crypto tokens are stored - are being held.

He also said some passwords for key wallets were "kept in plain text format" (which is another way of saying they were written down) and described FTX as being a company "uniquely set up to fail" over its lack of record keeping.

Image source, EPA

While we're watching this committee hearing into the collapse of FTX in Washington DC, there's activity at the magistrates' court in Nassau - where Sam Bankman-Fried was arrested by Bahamas police at the request of US authorities on Monday.

It's thought Bankman-Fried was brought to court on Tuesday morning in a police car, and a Reuters witness has reported his hearing is currently under way.

We will bring you the latest updates as we have them.

Image source, Reuters

Image source, Reuters

Image source, Reuters

Image source, Reuters

• 2 November: Documents leaked online show Alameda Research - a cryptocurrency hedge fund run by Sam Bankman-Fried - was financially unstable, as its reserves were made up of a crypto token created and issued by its sister company FTX
• 6 November: Changpeng Zhao, boss of FTX rival Binance announces the firm is selling its holdings in FTX-linked coins "due to recent revelations". The value of FTX crypto coins plummets and panicked customers rush to cash out
• 8 November: FTX suspends withdrawals from people trying to access their investments
• 8 November: Zhao announces that Binance is looking to buy FTX to "protect users"
• 9 November: Binance walks away from the sale, citing concerns about "mishandling of customer funds and alleged US agency investigations"
• 9 November: Sam Bankman-Fried attempts to gather emergency funding to plug the $8bn shortfall in finances
• 11 November: Sam Bankman-Fried resigns and files for Chapter 11 bankruptcy - form of bankruptcy in the US that allows a company to keep trading while it reorgansies its debts

Joe Tidy
Cyber-security reporter

Most of Sam Bankman-Fried’s charge sheet will not surprise many who've been watching his case for a while.

Accusations that he misused customer funds have been swirling for weeks. The gist of it is this – If I purchased $100 worth of Bitcoin through FTX I would expect it to be safely tucked away inside my FTX digital wallet for me when I needed and wanted to withdraw it.

US authorities say that in fact he was siphoning off my $100 of Bitcoin to his sister company Alameda Research instead. If proven, this was not only against the terms and conditions of his own platform but also illegal.

So the first seven counts are largely related directly to this fraudulent activity, including the seventh count of money laundering - which was allegedly an attempt to hide the illegal movements of funds.

However, the last count has come as a surprise as he is also being accused of "Conspiracy to Defraud the United States and Violate Campaign Finance Laws".

It’s widely known that Bankman-Fried was a prolific political investor, but this count accuses him of deliberately hiding certain undisclosed political donations.

No other details are being given yet but the charge will prick the ears of critics who have long accused Bankman-Fried of using his wealth as part of lobbying efforts in the US for favourable crypto industry regulation.

Image source, Reuters

The new FTX leader John Ray III, who took over after Bankman-Fried, is still testifying at Congress.

He is asked how bad the situation is around the collapse of FTX.

"We are dealing with a paperless bankruptcy" thanks to the way the company was created, he says.

He adds that it is difficult to trace the assets of FTX and the crypto world "really is unprecedented" due to the lack of documentation.

It could take weeks or months to secure all of FTX's assets as part of its bankruptcy process, the firm's CEO has told the US Congress.

John Ray III told the House Financial Services Committee many of the company's assets are held outside of the US.

Asked about their corporate governance, Ray was unflinching in his criticism of the firm he's winding up - describing a total absence of risk management in its structure.

Image source, Reuters

Samira Hussain
Reporting from the US Capitol

Ray just said staff at FTX were using Slack for expense reports and Quickbooks accounting software.

Ray points out there is nothing wrong with Quickbooks, he says it’s a good product, but not for a multi-billion dollar company.

The House Financial Services Committee is asking John Jay Ray III questions now, following his written statement.

Asked about the corporate arrangements and oversight of FTX and other businesses in the group, Ray says the group's collapse appears to come from "absolute concentration of control in the hands of a small group of grossly inexperienced, non-sophisticated individuals".

Asked if there was any independent governance or separation between the FTX exchange (where customers could swap traditional currency for crypto) and Alameda Research - Bankman-Fried's firm which traded cryptocurrency assets - Ray says there was no distinction between the operations.

Image source, Reuters

Sam Bankman-Fried has expressed remorse in interviews for the collapse of his company FTX and the money that was lost, but has denied any fraud.

However, the unsealed indictment accuses him of "knowingly having devised and intending to devise a scheme and artifice to defraud" - and details several types of fraud including commodities fraud, wire fraud, securities fraud, and more.

It states that since 2019, Bankman-Fried had misappropriated customer deposits in a "manipulative" scheme.

It also charges the former billionaire with violating campaign finance laws by making donations to candidates running for office in the names of other people and therefore aggregating more than the alloted $25,000 in one year.

His legal team has released a statement saying Bankman-Fried was reviewing the charges “and considering all of his legal options”.

We've just heard from John Jay Ray III who took charge of FTX in November, after Sam Bankman-Fried resigned.

The US lawyer is a veteran of messy corporate bankruptcies – most famously presiding as chairman of Enron, as the energy giant – one of the biggest companies in the US before its collapse - worked through the fallout from a massive accounting and financial scandal.

Ray has earned a reputation for successfully fighting for money to repay creditors, for example, by winning legal cases against banks that worked with Enron and were accused of participating in fraud.

He told the congressional panel FTX's collapse stems from the concentration of control in a small group of grossly inexperienced individuals.

Making his first comments since being installed as CEO, Mr Ray said there were unacceptable management practices and computer systems that gave certain people unlimited access to customers' information.

When he came in he was starting from a "near-zero corporate infrastructure" without any of the record keeping he would expect to find.

He also outlined there were loans and other payments to insiders in excess of $1.5bn.

The arrest of Sam Bankman-Fried is "welcome news" but does not "get to the bottom of what happened" at the cryptocurrency exchange, a US congressman has said.

Patrick McHenry, the most senior Republican on the House Financial Services Committee, says it appears Bankman-Fried was engaged in "same old-school fraud, just with new technology".

He goes on to say he believes in the underlying technology behind cryptocurrencies and other digital assists, saying it is important to separate this out from alleged fraudsters who use them to exploit people.

According to a document unsealed by a New York court on Tuesday, prosecutors are charging Bankman-Fried with eight counts. They are:

• Conspiracy to Commit Wire Fraud on Customers
• Wire Fraud on Customers
• Conspiracy to Commit Wire Fraud on Lenders
• Wire Fraud on Lenders
• Conspiracy to Commit Commodities Fraud
• Conspiracy to Commit Securities Fraud
• Conspiracy to Commit Money Laundering
• Conspiracy to Defraud the United States and Violate Campaign Finance Laws

A hearing with FTX's current CEO, John Ray III, who is overseeing its bankruptcy process has begun in Washington DC.

Sam Bankman-Fried will no longer be testifying before the House of Representatives Financial Services Committee following his arrest, the committee's chair congresswoman Maxine Waters confirms in her opening remarks.

Waters has some strong words for the crypto company, accusing Bankman-Fried and other FTX executives of stealing from the "cookie jar of customer funds" to pay for their "lavish lifestyles".

US prosecutors are reportedly charging Sam Bankman-Fried with eight additional counts, on top of the charges from the Securities and Exchange Commission that were unveiled Tuesday morning.

The new charges range from wire fraud to money laundering.

Samira Hussain
Reporting from US Capitol

As we've been reporting - the headline witness at the Congressional hearing will no longer be testifying as he has been arrested in The Bahamas.

But the current CEO of FTX, John Jay Ray III, is still set to tell lawmakers what he’s seen since cracking open the company books a month ago.

He’s already called the situation with FTX unprecedented with unacceptable management practises, saying in his prepared statement, “never in my career have I seen such an utter failure of corporate controls at every level of an organization”.

Ray managed some of the biggest corporate disasters, including the Enron accounting scandal in 2001, so he has seen his fair share of mismanagement.

Between testimony we will hear today, to civil charges by US financial regulators and criminal charges by the government, the public may get a clearer picture of what went wrong at FTX.

But answers or any sort of accountability will be short. The man at the center of the entire debacle is still in The Bahamas.

Image source, Reuters

Sam Bankman-Fried was previously scheduled to testify before the US Congress about the collapse of FTX - but now his arrest throws that appearance into doubt.

Following news of the arrest in the Bahamas, Congresswoman Maxine Waters, chairwoman of the House Financial Services Committee, said she was disappointed not to be able to hear from Bankman-Fried.

“We remain committed to getting to the bottom of what happened, and the committee looks forward to beginning our investigation by hearing from Mr John Ray III tomorrow [Tuesday],” she added in her statement.

“Although Mr Bankman-Fried must be held accountable, the American public deserves to hear directly from Mr Bankman-Fried about the actions that’ve harmed over one million people, and wiped out the hard-earned life savings of so many.

“The public has been waiting eagerly to get these answers under oath before Congress, and the timing of this arrest denies the public this opportunity.“

Sam Bankman-Fried, also known by his initials SBF, is the founder and former CEO of the now-bankrupt cryptocurrency exchange FTX.

The company’s meteoric rise earned the 30-year-old the title "King of Crypto”. Bankman-Fried is also CEO of crypto trading company and hedge fund Alameda Research, which has also filed for bankruptcy.

Bankman-Fried grew up on the campus of Stanford University in California where his parents were both law professors. He attended Massachusetts Institute of Technology - an elite US research university - where he studied physics and maths.

He began his career on Wall Street in 2013 at age 21, eventually founding FTX in 2019. The company’s rapid growth led Bankman-Fried to become a billionaire in 2021. He was worth $26bn (£21bn) at the peak of his career.

Image source, Getty Images

The crypto king - who lived in and worked from a luxury penthouse in the Bahamas - is also known for his support for the“effective altruism” movement, a research field and a community of people who say they aim to take actions that benefit others as much as possible.

He donated millions of dollars to politicians from both major US political parites as well as philanthropic causes.

In the wake of FTX’s liquidity crisis, Bankman-Fried resigned from his role as CEO and the company filed for bankruptcy in November.

You can read more about Bankman-Fried’s rise and fall here.

In the last few hours more charges have been authorised against Sam Bankman-Fried following the collapse of the crypto exchange he co-founded, FTX.

US regulator the Securities and Exchange Commission (SEC) has charged him with defrauding customers out of billions of dollars.

The SEC alleges he misused funds belonging to FTX's customers.

Bankman-Fried had "built a house of cards on a foundation of deception" in his dealings with investors in FTX firm, the SEC said in a statement.

It added:"Today we are holding Mr Bankman-Fried responsible for fraudulently raising billions of dollars from investors in FTX and misusing funds belonging to FTX's trading customers."

You can read more about the latest charges here.

Image source, Getty Images

Sam Bankman-Fried is due to appear before a magistrates' court in the Bahaman capital of Nassau in the next couple of hours.

Bahamian police said the 30-year-old was arrested for "financial offences" against laws in the US and The Bahamas.

He was arrested after 18:00 local time on Monday (23:00 GMT) at his luxury gated community called the Albany in Nassau.

Damian Williams, US Attorney for the Southern District of New York, said in a statement the arrest came at the request of the American government and an indictment against Bankman-Fried would be unsealed on Tuesday.

The Bahamas' attorney general's office said it expects him to be extradited to the US.

Image source, Getty Images

Welcome to our live coverage of the arrest of Sam Bankman-Fried, the founder and former CEO of the collapsed cryptocurrency exchange giant FTX.

Bankman-Fried, 30, was arrested in The Bahamas overnight and is now facing extradition to the US. The crypto boss hit the headlines last month after his company filed for bankruptcy in the US, leaving many users unable to withdraw their funds.

According to court filings, FTX owes its top investors almost $3.1bn (£2.5bn). Bankman-Fried is due to appear before a magistrates' court in the Bahaman capital of Nassau in a short while - and we’re also expecting to hear details of the criminal charges filed against him by the US government.

US regulator the Securities and Exchange Commission (SEC) earlier announced it was also charging Bankman-Fried with defrauding customers of billions of dollars.

Bankman-Fried, who was once known as the ‘king of crypto’, had been expected to appear at a House of Representatives committee hearing on Tuesday as part of its investigation into his company’s collapse and how it had handled customer funds.

While this is now in doubt, the new CEO of FTX, John J Ray, is expected to make an appearance.

Speaking to the BBC last week, Bankman-Fried denied fraud but admitted that he was "not nearly as competent as I thought I was". Stick with us as we bring you further updates on the charges and reaction to his arrest.