According to Bahamian regulators, $3.5 billion worth of seized assets are being held in safe custody, with the intention of returning them to misled investors, at the discretion of the courts.
As former FTX CEO Sam Bankman-Fried awaits his court hearing on January 3, the Securities and Exchange Commission of the Bahamas (SCB) announced that it will seize $3.5 billion worth of digital assets from FTX Digital Markets You have. This FTX entity is a subdivision of the Bahamian crypto exchange.
The assets were seized on November 12, according to Blookmberg. That was the day FTX filed for Chapter 11 bankruptcy.
Steps Taken Immediately After Filing Bankruptcy
Bloomberg announced via Twitter that “The Bahamian regulator took control of $3.5 billion worth of digital assets at FTX Digital Markets shortly after it filed for bankruptcy, based on information provided by Sam Bankman-Fried.”
Interestingly, according to the Bahamian authorities, the confiscation of the digital assets occurred on the advice of SBF. He reportedly warned SCB of an imminent demise of client funds that would ensue if no action was taken.
Just hours after filing for bankruptcy, $372 million worth of cryptocurrency was stolen. More than half of the $700 million sum is said to have been withdrawn via FTX. The confiscation of the SCB probably prevented even worse things from happening.
Funds are to be Returned to Investors at the Court’s Discretion
Funds held by the SCB will be returned to their respective owners, according to the press release provided by the Bahamas Authority:
“Digital assets transferred on November 12, 2022, will be temporarily held by the Commission until the Supreme Court of the Bahamas orders the Commission to extradite them to the customers and creditors who own them or to the JPLs (Joint Preliminary Administrators) that will be administered under the rules on the bankruptcy estate for the benefit of FTXDM clients and creditors”.
The SCB also stressed that it will continue its own investigation into the collapse of FTX Digital Markets and the collapse of FTX itself. The investigation relates specifically to the relationship between FTXDM and Alameda, which allegedly had an inherent advantage in trading on the exchange. The merger of funds between these two entities is still being resolved in court.
This SCB move will provide some relief to local investors in particular, as FTX interim CEO John Ray III previously stated that international clients, as compared to those based in the United States, risk losing a higher percentage of their funds.
By Audy Castaneda
