Bahamas Regulators to Investigate FTX Over Criminal Misconduct

While FTX is still reeling from the impact of its liquidity crunch and recently filed Chapter 11 bankruptcy, more investigations are springing up from various angles.

The latest is the Royal Bahamas Police Force investigation for suspected criminal misconduct. Notably, financial investigators and the Securities Commission of the Bahamas (SCB) have launched a probe into the bankrupt FTX headquarters on its island FTX Digital Markets Ltd.

As published in a Twitter post made by the Royal Bahamas Police on November 13th, “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.”

This particular FTX Digital Markets Ltd., currently undergoing investigation, is licensed in the Bahamas under The Bahamas’ Digital Assets and Registered Exchange Act and regulated by the Securities Commission of the Bahamas. FTX Digital Markets Ltd. is a subsidiary of FTX Trading. 

FTX Lays False Allegation on Bahamas Regulator

Notably, this investigation follows FTX’s allegations against the regulator which insinuated that the exchange was instructed by Bahamian HQ’s regulations and regulators to facilitate the withdrawal of Bahamian funds, thereby, prioritizing withdrawals for citizens of the Bahamas. In response, SCB vehemently denied ever instructing it authorizing such instruction. 

In a media release shared by the regulator on Twitter, it denied the allegation saying, “The Commission wishes to advise that it has not directed, authorized or suggested to FTX Digital Markets, Ltd. the prioritization of withdrawals for Bahamian clients.” adding that it does not condone any preferential treatment to any client or investor of the exchange.

Before now, SCB had already launched an investigation into FTX Digital Markets, the regulator engaged in the “very closely monitoring and investigating” exercise of the exchange. Many other regulators have opened an investigation into the implosion of FTX since its failed acquisition by Binance and its liquidity crunch.

Specifically, the United States regulators, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC) have been investigating the exchange for mismanagement of users’ funds. At present, FTX is no longer operational in Europe as the region watchdog Cyprus Securities and Exchange Commission (CySEC) has ordered that it suspend its activities.