Bahamas Regulator Froze $3.5B to Refund Affected FTX Users

The Securities Commission of the Bahamas has announced plans to deliver FTX frozen assets to the exchange’s customers who are the rightful owners.

After seizing FTX assets in mid-November as an “urgent interim regulatory action” which it said was vital to “protect the interests of clients and creditors”, the Bahamian regulator says it currently holds FTX’s $3.5 billion worth of assets according to the market price at the time of transfer.

These assets were transferred to a wallet under the sole supervision of the regulator. Noteworthy, neither the disgraced FTX founder Sam Bankman-Fried nor his former colleague Gary Wang retained access to the funds after it was transferred to the commission in mid-November. According to the Executive Director of the commission, Christina Rolle:

“All transferred assets were and remain under the sole control of the commission.”

This happened just after FTX, its sister trading firm Alameda Research and its other associates filed for bankruptcy in the United States. 

FTX Lawyers Frowns at Bahamas Authorities 

Lawyers representing the defunct crypto exchange have been doubtful of the activities of the Bahamas government in recent times. They seem to suspect certain foul play and are not comfortable with keeping sensitive documents and data with the Bahamian authorities which might give them access to FTX funds.

Therefore, the demand for internal records by its Bahamian headquarters was denied earlier this month.

The Bahamas regulator has been hanging over the bankrupt crypto exchange and Bankman-Fried since the former filed for Chapter 11 bankruptcy. FTX went under the radar of so many regulators especially as they suspected criminal misconduct from the exchange.

“In light of the collapse of FTX globally and the provisional liquidations of FTX Digital Markets Ltd., a team of financial investigators from the Financial Crimes Investigation Branch are working closely with the Bahamas Securities Commission to investigate if any criminal misconduct occurred,” the Royal Bahamas Police tweeted.

Shortly after the resignation of SBF, the Bahamian division of the cryptocurrency exchange FTX Bahamas also filed for a Chapter 15 bankruptcy in the United States as a foreign entity. It provided provisional liquidation who can act as foreign representatives with the opportunity to access “broad discovery concerning the property and affairs of a debtor.”