The Bahamas confirm they still have hold of $3.5 Bn worth of FTX assets since the fall
•The Securities Commission of The Bahamas has confirmed that it still holds $3.5 billion worth of FTX’s assets, which it took possession of in early November, soon after the failed crypto exchange filed for bankruptcy.
• The commission said assets will remain stored in its digital wallets until the Bahamas Supreme Court directs them to distribute these to the defunct exchange’s customers and creditors or they receive clarity about how the firm’s insolvency is to be handled.
• In a Delaware court earlier this month, a group of lawyers representing FTX petitioned Judge John Dorsey to deny a request from Bahamian regulators to be granted access to the U.S. division’s cloud-based systems, which could include data from its Google, Slack, and Amazon Web Services accounts.
• FTX was hit by an attack of unknown origin — which nabbed cryptocurrency worth an estimated $650 million — shortly after the firm’s financial troubles emerged and it filed for Chapter 11 Bankruptcy
The news that the Securities Commission of The Bahamas still holds a reported $3.5 billion worth of FTX’s assets is a positive reminder that, these days, governments are taking crypto exchanges more seriously than ever before. In early November, the commission took possession of the FTX assets following the exchange’s bankruptcy filing.
This effort to preserve and protect investors showcases a commitment expressed by multiple agencies worldwide to ensure that crypto exchanges live up to their obligations and follow applicable laws. With government watchdogs paying increased attention to crypto markets, traders and investors around the world can be confident that control measures are in place to safeguard them from potentially fraudulent or irresponsible practices.
Background on FTX’s Bankruptcy and Bahamian Regulatory Involvement
The Bahamian Securities Commission seized the assets from FTX after news of its filing for Chapter 11 bankruptcy became public. The commission was concerned that these assets were not properly insured or protected against potential fraudulent activities. The value of these assets has since been disputed, with some claiming it is closer to $500 million rather than $3.5 billion.
FTX initially announced its decision to file for Chapter 11 bankruptcy citing “unforeseen circumstances outside of the company’s control” as the primary cause of its financial troubles. However, many speculated that these troubles were exacerbated by an alleged attack on FTX that occurred shortly after news of their financial issues became public knowledge. It is still unclear who was behind this attack or what their motives were, but it certainly didn’t help stem any panic surrounding the company’s financial difficulties at that time.
In a resolution issued by the Securities Commission of the Bahamas, it was stated that assets of the defunct cryptocurrency exchange would remain stored in its digital wallets until further direction from either the Bahamas Supreme Court or clarity is gained as to how the firm’s insolvency is to be addressed.
This will help ensure safety and compliance norms are followed in order to protect investors, customers, and creditors. The commission added that an investigation into crypto frauds and market manipulation has begun in order to ensure any unlawful activity is prevented. Such measures taken by both the Bahamas Supreme Court and the Securities Commission should help restore investor faith in the local cryptocurrency sector.
Recent Developments in the Case
Earlier this month, a group of attorneys representing FTX appeared before Judge John Dorsey. Their main request seemed specific and precise: they asked the judge to deny a request from Bahamian financial regulators who sought access to FTX’s cloud-based systems located in the U.S. Such systems are incredibly sensitive and could potentially reveal internal information via data stored on Google, Slack, and Amazon Web Services accounts. In response to the concerns raised by FTX’s legal team, Judge Dorsey is scheduled to decide later this week whether or not to honor the regulator’s demand for access — a decision that will have significance both inside and outside of court.
