The Securities Commission of the Bahamas (SCB) has revealed that it seized $3.5 billion worth of digital assets from FTX Digital Markets, the Bahamian subdivision of the defunct cryptocurrency exchange. At the same time, Sam Bankman-Fried awaits his arraignment on January 3rd within the confines of his parent’s home.
Bloomberg reports that the assets were seized on November 12th, after the former crypto behemoth filed for Chapter 11 bankruptcy.
It is interesting to note that the confiscation of digital assets occurred on the advice of the SBF, according to Bahamian authorities. The former CEO of FTX allegedly warned the SCB that customer funds would be “imminently dissipated” if no action was taken.
As per the press release submitted by the Bahamian authority, funds currently in an SCB digital wallet will be returned to their respective owners.
“In the meantime, the Commission is holding the digital assets transferred on 12 November 2022 temporarily until the Bahamas Supreme Court directs it to deliver them to the customers and creditors who own them or to the JPLs (Joint Provisional Liquidators) for administration under the rules that govern the insolvency estate.”
In addition, the SCB said it would maintain its own investigation into FTX Digital Markets’ collapse and that of FTX itself. FTXDM and Alameda are being investigated, where Alameda was alleged to have an inherent advantage when trading on the exchange. The court is still determining the extent of co-mingling of funds between the two entities.
FTX investors will doubtless be relieved by the SCB’s action, as the interim chief executive of FTX – John Ray III – previously stated international customers would lose a greater percentage of their funds.
Within an hour of the bankruptcy declaration, $372 million worth of tokens were stolen. There are reports that more than half of $700 million has been withdrawn from FTX – the SCB’s prudent decision may have prevented quite a bit of mischief.
As a result of media reports of cyberattacks on FTX and possible looting of FTX-controlled wallets by former employees, the Commission issued a media statement stating that “FTX’s digital assets were at a significant risk of imminent dissipation to the prejudice of its creditors and customers.”
In a statement, the Commission said that FTX founders Sam Bankman-Fried and Gary Wang could no longer access the $3.5 billion in tokens that had been transferred.
As a result of the Commission’s media statement, FTX was not directed to prioritize Bahamas-based clients’ withdrawals.