US prosecutors slapped disgraced cryptocurrency tycoon Sam Bankman-Fried with multiple criminal charges on Tuesday for massive fraud as he built his FTX crypto empire.

The charge sheet landed as Bankman-Fried appeared in a Bahamas court and indicated that he would fight an extradition request by the United States and asked to be released on bail pending a hearing.

The founder of the FTX platform, who was arrested in the Bahamas on Monday at the request of the United States, is facing a raft of accusations, including from US market regulators who say that the investor knowingly built a fraudulent house of cards.

In a Nassau courtroom, attended by US embassy officials and Bankman-Fried's parents, Bahamian prosecutors argued that the suspect was a flight risk and should be denied bail pending an extradition hearing, the New York Times reported.

The criminal charges, made by federal prosecutors in New York, posed the greatest threat to Bankman-Fried who risks a long jail sentence given the billions of US dollars involved.

"Mr. Bankman-Fried is reviewing the charges with his legal team and considering all of his legal options," his lawyer Mark Cohen said in a statement.

In their indictment, US prosecutors said Bankman Fried also carried out money laundering, violated campaign finance laws and committed wire fraud since the start of his company in 2019.

Bankman-Fried "was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform's customer funds for his own personal benefit and to help grow his crypto empire," prosecutors said.

The legal hammer fell after the 30-year-old spent weeks defying legal advice and made multiple media appearances defending his actions, usually by video link from the Bahamas, where his company is headquartered.

Bankman-Fried had embodied the emergence of cryptocurrency as an above-board investment rather than a dodgy get-rich-quick scheme for high-risk investors.

His FTX platform was plugged by celebrities in advertising campaigns and he became a regular presence in Washington, where he donated tens of millions of US dollars in political contributions, mainly to the Democratic Party.

But after reaching a valuation of US$32 billion, FTX's implosion was swift following a November 2 media report on ties between FTX and Alameda, a trading company also controlled by Bankman-Fried.

The report exposed that Alameda's balance sheet was heavily built on the FTT currency – a token created by FTX with no independent value – and exposed Bankman-Fried's companies as being dangerously interlinked.

Reeling from customer withdrawals and short some US$8 billion, FTX and around 100 related entities filed for bankruptcy protection on November 11, inviting scrutiny from regulators, prosecutors and furious clients.

"If convicted he could be facing the rest of his life in prison, given the dollar amount of the fraud," said Jacob S Frenkel, a former federal criminal prosecutor at Dickinson Wright.

"We would not see an indictment if prosecutors were not absolutely convinced that they will win a conviction."

In his media interviews, Bankman-Fried has admitted to mistakes, but has denied intent to defraud his customers.

FTX CEO John Ray, who came to the company after the debacle, told Congress on Tuesday that the problems arose because control was "in the hands of a very small group of grossly inexperienced and unsophisticated individuals."

"Never in my career have I seen such an utter failure of corporate controls at every level of an organisation, from the lack of financial statements to a complete failure of any internal controls or governance whatsoever," Ray said.

The fall of FTX has caused major doubts about the long term viability of cryptocurrency and heaped stress on other platforms and entities that rode the success of Bitcoin and other currencies. (AFP)