The regulator claimed that Bankman-Fried was collaborating with the Bahamas’ government in this endeavor and stated that “immediate interim regulatory action” was required to safeguard creditors.
The Bahamas Securities Commission revealed on Thursday that it had mandated the transfer of FTX’s cryptocurrency holdings to government-controlled wallets on the preceding Saturday.
The commission stated in a press release that it issued the order in accordance with the law, which enables it to act if necessary to protect clients or their funds.
“The Securities Commission of The Bahamas (‘the Commission’), in the exercise of its powers as regulator acting under the authority of an Order made by the Supreme Court of The Bahamas, took the action of directing the transfer of all digital assets of FTX Digital Markets Ltd. (‘FDM’) to a digital wallet controlled by the Commission, for safekeeping,” the release said. “Urgent interim regulatory action was necessary to protect the interests of clients and creditors of FDM.”
Why the commission made the announcement five days after issuing the order is unknown. The possibility of these transfers happening is likewise unknown, as is the precise timing. Christina Rolle, the executive director of SCB, did not pick up the phone. These transactions were linked to derogatory remarks made about the former FTX CEO Sam Bankman-Fried.
On Friday, November 11, FTX declared bankruptcy in a chaotic filing that incorrectly listed other businesses that are not a part of FTX as also declaring bankruptcy. The company looked to have been hacked on the evening of November 11 and into the early hours of November 12, when hundreds of millions of dollars’ worth of cryptocurrency began to flow out of FTX’s wallets.
In a file on Thursday, attorneys for FTX stated that the filing, which acknowledges foreign bankruptcies, was submitted by joint provisional liquidators appointed by the Bahamas court in an effort to discredit the larger group’s U.S. filings.
“The filing of the Chapter 15 Case without advance notice and in the SDNY is a blatant attempt to avoid the supervision of this Court and to keep FTX DM isolated from the administration of the rest of the Debtors, which constitute the vast majority of the remainder of the FTX group. Under normal circumstances, that would be inappropriate and grounds for transfer to this Court. But these are not normal circumstances,” the attorneys said.
They continued by claiming that Bankman-Fried was collaborating on this with the government of the Bahamas.
“Mr. Bankman-Fried, the co-founder, and controlling owner of all of the Debtors and of FTX DM, appears to be supporting efforts by the JPLs to expand the scope of the FTX DM proceeding in the Bahamas, to undermine these Chapter 11 Cases, and to move assets from the Debtors to accounts in the Bahamas under the control of the Bahamian government,” the filing said.
The SCB will “consult with other regulators and authorities” in other jurisdictions, according to a news release, in the upcoming days. The regulator did issue a statement on Saturday refuting FTX’s earlier assertion that it permitted withdrawals for citizens of The Bahamas, stating that it had not instructed FTX to do so.