The Securities Commission of the Bahamas said Thursday the agency seized all digital assets under the control of FTX’s Bahamian subsidiary FTX Digital Markets Ltd. — to the tune of more than $3.5 billion — “for safekeeping” following the cryptocurrency exchange’s collapse.
The regulator said in a press release that the funds were transferred to digital wallets under its exclusive control on Nov. 12, the day after FTX filed for Chapter 11 bankruptcy, after determining “there was a significant risk of imminent dissipation” of the assets under FTXDM’s control based on information disgraced founder Sam Bankman-Fried provided concerning cyberattacks on the system.
FTX CUSTOMERS FILE CLASS ACTION LAWSUIT SAYING ASSETS BELONG TO THEM
The funds are being held “on a temporary basis,” the SCB said, while it waits for instructions from the Supreme Court of the Bahamas on whether the assets should be “delivered to the customers and creditors who own them” or to the court- appointed Joint Provisional Liquidators (JPLs) in charge of unwinding FTXDM.
The seizure of the funds by the Bahamian watchdog has been a source of contention between the agency and FTX’s new CEO, John Ray III, who replaced Bankman-Fried and filed FTX’s Chapter 11 bankruptcy in the US after taking control of the firm. Bahamas-based FTXDM separately filed a Chapter 15 bankruptcy which has been rolled into the Chapter 11 – and both sides have been butting heads throughout the proceedings thus far.
US PROBES HOW $370 MILLION VANISHED IN HACK AFTER FTX BANKRUPTCY
The Security Commission of The Bahamas admitted last month to seizing the assets of FTXDM, but did not put a dollar amount on the figure at the time.
During his testimony before Congress in mid-December, Ray accused the Bahamian officials of taking the funds with the assistance of forming FTX leadership, and claimed the authorities were being uncooperative.
“We’ve repeatedly asked them for clarity about what they’ve been doing,” Ray said of the Bahamian officials. “We’ve been shut down by them.”
REGULATORY EXPERT: FTX ‘JURISDICTION SHOPPED’ TO LOCATE IN LAX REGULATORY ENVIRONMENT
Ray also said it appears Bankman-Fried, who was arrested hours before the hearing on several charges related to the FTX collapse, had attempted to undermine the US bankruptcy process by moving company assets to accounts under the control of the Bahamian authorities.
Bahamian officials said in court filings that they requested a criminal investigation into FTX on Nov. 9 after then-FTXDM co-CEO Ryan Salame tipped them off in a phone call about alleged transfers of client funds from the exchange to sister company Alameda Research.
GET FOX BUSINESS ON THE GO BY CLICKING HERE