The Bahamas’ securities regulator says it has ordered the transfer of FTX crypto to government wallets

The Bahamas Securities Commission announced Thursday that it had ordered the transfer of the contents of FTX’s cryptocurrency wallets to government-controlled wallets the previous Saturday.

The Commission said in a press release that it issued the order under existing powers that allow it to take action if it needs to protect clients or their money.

“The Bahamas Securities Commission (the “Committee”), in the exercise of its powers as a regulator acting under the authority of an order of the Supreme Court of The Bahamas, has taken action to direct the transfer of all digital assets of The Bahamas FTX Digital Markets Limited (“FTX Digital Markets Limited”) FDM”) to a digital wallet controlled by the Commission, for safekeeping.” “The urgent temporary regulatory action was necessary to protect the interests of FDM’s clients and creditors.”

It is unclear why the committee made the announcement five days after the application was submitted. It is also unclear if and when exactly these transfers took place. Christina Rule, CEO of the Savings and Credit Bank, did not return a phone call.

FTX declared bankruptcy on Friday, November 11, in a messy filing that wrongly described a number of companies not part of the FTX umbrella as also filing for bankruptcy. On the evening of November 11th and into the early hours of November 12th, the company appeared to have been hacked, with hundreds of millions of dollars in cryptocurrency flowing out of FTX wallets. Some of these transactions have been linked to lewd comments about former FTX CEO Sam Bankman-Fried.

FTX US General Counsel Rain Miller tweeted at the time he was investigating, before later saying that FTX was working to move some funds into cold storage wallets.

Read more: FTX Hacker Panic, Still Holds $339 Million in Ether, Cryptos: Arkham Intelligence

The release may also refer to a court battle between the United States and the Bahamas, where FTX is headquartered. The SCB statement said, “It is not understood by the Commission that FDM is a party to the Chapter 11 bankruptcy proceeding in the United States.”

FTX Digital Markets filed for Chapter 15 bankruptcy in the US on November 15, days after most of the rest of the FTX group filed for Chapter 11 bankruptcy. Even more bizarrely, FTX Digital Markets filed for bankruptcy in the Southern District of New York, rather than in Delaware where it is located. The rest of the companies provided.

FTX attorneys said in a filing Thursday that joint interim liquidators appointed by a Bahamas court filed the file, which recognizes foreign bankruptcy, as part of an effort to undermine the broader group’s filings in the United States.

“Bringing a Chapter 15 case without prior notice and in SDNY is a blatant attempt to avoid the oversight of this court and to keep the FTX DM insulated from managing the remaining debtors, who make up the vast majority of the remainder of the FTX group. Under normal circumstances, it would be inappropriate and would be grounds for conversion to this Court. But these are not normal circumstances, ”the lawyers said.

They went on to claim that Bankman-Fried was working with the Bahamas government on the effort.

“Mr. Bankman Fried, co-founder and controlling owner of all debtors and FTX DM, appears to support JPLs efforts to expand FTX DM’s proceedings in The Bahamas, to undermine this Chapter 11 case and transfer assets from debtors to accounts in The Bahamas under the control of the Bahamas Government” .

A press release said the SCB would “engage with regulators and other authorities” in various jurisdictions in the coming days.

The regulator published a statement on Saturday announcing that it did not order FTX to allow Bahamian residents to withdraw funds, contradicting a claim FTX previously made to enable withdrawals for people living in the Bahamas.

Read more: The new head of FTX condemns the management of the cryptocurrency exchange during Sam Bankman-Fried’s tenure

Update (November 18, 2022, 01:37 UTC): Adds additional information.

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