Bahamian regulator seizes $3.5 billion of FTX crypto assets

The FTX logo on a laptop screen.

Andrey Rudakov | Bloomberg via Getty Images

The Securities Commission of the Bahamas says it has seized $3.5 billion in cryptocurrency from collapsed crypto exchange FTX.

In a media release late Thursday, the watchdog confirmed the total sum taken from FTX̵[ads1]7;s Bahamian subsidiary, FTX Digital Markets, adding that the funds were moved into their own digital wallets “for safekeeping.”

The regulator had previously confirmed that it held some of FTX’s digital assets, but did not specify the amount.

The funds were valued at more than $3.5 billion, based on market prices at the time of the transfer, according to the commission. The transfer took place on November 12, the day after FTX filed for Chapter 11 bankruptcy protection in the US

The Bahamian Securities Commission said the funds are being held on a “temporary basis” until the Bahamas Supreme Court directs them to deliver them to customers and creditors, or to liquidators of the insolvency estate.

The regulator said it took the money after receiving information from Sam Bankman-Fried, FTX’s disgraced co-founder, regarding cyber attacks on the systems of FTX’s Bahamian unit.

Bahamian regulator seizes .5 billion of FTX crypto assets

There was “significant risk of imminent dissipation” of the assets under FTX Digital Markets’ control, it said.

After FTX filed for bankruptcy, it was charged with a suspected hack that saw $477 million drained from the firm’s crypto wallets. The perpetrator’s identity is currently unknown.

The Bahamian regulator has come under scrutiny over its role in the FTX collapse and subsequent legal proceedings.

The Commission wanted to handle insolvency proceedings for FTX in the Bahamas. But FTX’s US lawyers contested the move, alleging that they coordinated with Bankman-Fried to transfer FTX’s digital assets into their own custody.

US lawyers for FTX had refused to give Bahamian court-appointed liquidators access to the company’s computer systems, saying: “We don’t trust the Bahamian government.”

FTX’s former CEO Bankman-Fried was arrested in the Bahamas and subsequently extradited to the United States, where he awaits trial on charges of fraud, conspiracy to commit money laundering and conspiracy to defraud the United States, and campaign finance violations.

He was released last week on $250 million bail and reportedly received visitors at his family’s California home, including “The Big Short” author Michael Lewis.

Bankman-Fried is expected to be arraigned and enter a plea in federal court in Manhattan on January 3.

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