Wednesday, March 29, 2023

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The Bahamas seizes assets of the FTX digital exchange worth $3.5 billion

While the former CEO of the FTX Stock Exchange, Sam Bankman Fried, awaits his trial on the third of next January, in the United States of America, the Securities Commission of the Bahamas (SCB) revealed that it had seized digital assets worth $ 3.5 billion from the FTX platform.

Why did the Bahamas seize the assets of FTX?

The assets were seized on November 12th, the day after the former cryptocurrency trading giant filed for Chapter 11 bankruptcy, according to Bloomberg.

Interestingly, the said digital assets were confiscated on the advice of Sam Bankman Fried, according to the Bahamas authorities. The former CEO of the FTX exchange reportedly warned the Bahamas Securities Commission of the “imminent squandering” of client funds that would occur if action was not taken.

As much as $372 million worth of tokens were stolen just hours after the bankruptcy was announced. It has been reported that more than half of the $700 million has been withdrawn from the FTX cryptocurrency market  a wise decision by the Bahamas Securities Commission may have prevented too much mischief from being done.

Return of funds to investors at the discretion of the court

Funds currently held in a Bahamas Securities Commission digital wallet will be returned to their owners, according to the press release provided by the Bahamas Authority.

The statement added: “The digital assets transferred on November 12 are being held by the Commission on a provisional basis until such time as the High Court of The Bahamas directs the Commission to turn them over to the clients and creditors who own them, or to the Jet Payment Companies (joint provisional liquidators) that are administered.” under the rules governing the insolvency estate for the benefit of clients and creditors of FTXDM.”

The Bahamas Securities Commission has also confirmed that it will continue its investigation into the collapse of FTX Digital Markets, and the collapse of FTX itself. The investigation specifically relates to the relationship between FTXDM and Alameda, who reportedly have an inherent advantage when trading on the exchange. The mixing of funds between the two entities is still being planned by the court.

Are local FTX investors safe?

The move by the Bahamas Securities Commission will no doubt bring some relief to local FTX investors, as interim FTX CEO John Ray III has previously stated that international clients are at risk of losing a larger proportion of their money than those in the US.

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