Securities Commission refutes FTX withdrawals claim
NASSAU, BAHAMAS — A team of investigators from the Financial Crimes Investigation Branch is working closely with the Bahamas Securities Commission to investigate potential criminal misconduct surrounding the collapse of the crypto-exchange FTX.
It’s the latest in a series of explosive revelations that saw the demise of FTX globally and the provisional liquidation of FTX Digital Markets Ltd. in The Bahamas.
FTX Group announced on Friday that it filed for Chapter 11 bankruptcy in the United States, along with the resignation of its 30-year-old founder and CEO Sam Bankman-Fried. Bankman-Fried has been replaced by Enron liquidation lawyer John J. Ray III. FTX has reportedly claimed in filings that it has between $10 billion and $50 billion in estimated liabilities and assets.
On Saturday, FTX general counsel Ryne Miller announced FTX US and FTX.com had initiated precautionary steps to move all digital assets to cold storage. Miller said the process was expedited to mitigate damage upon observing unauthorized transactions.
FTX said analysts flagged that hundreds of millions of dollars of assets had been moved from the platform in “suspicious circumstances”.
Meanwhile, the Securities Commission of The Bahamas (SCB) has refuted claims by FTX that it has been facilitating withdrawals in accordance with Bahamian regulations.
It follows reports that desperate FTX users began bribing Bahamian users to help withdraw frozen funds after Zane Tuckett, former FTX Head of Institutional Sales, revealed local users could still take funds off the platform.
In a tweet, Tuckett said: “Per Bahamian HQ’s regulation and regulators, we have begun to facilitate the withdrawals of Bahamian funds. As such, you may have seen some withdrawals processed by FTX recently as we complied with the regulators.”
In a statement, the SCB advised that it “has not directed, authorized or suggested to FTX Digital Markets Ltd. the prioritization of withdrawals for Bahamian clients”.
It continued: “The Commission further notes that such transactions may be characterized as voidable preferences under the insolvency regime and consequently result in clawing back funds from Bahamian customers. In any event, the Commission does not condone the preferential treatment of any investor or client of FTX Digital Markets Ltd. or otherwise.”
Last week, the SCB took action to freeze assets of FTX Digital Markets and related parties, as the crypto exchange has collapsed. Brian Simms, K.C. (Lennox Paton Counsel and Attorney-at-Law) has been appointed as provisional liquidator.
FTX founder Sam BankmanFried has resigned as the company’s CEO. FTX filed for bankruptcy last Friday following one of the highest-profile crypto collapses. The collapse came after traders rushed to withdraw some $6 billion from the crypto exchange rival exchange giant Binance abandoned a proposed rescue deal.
Last year FTX moved its headquarters from Hong Kong to The Bahamas, and earlier this year announced plans to invest around $60 million towards the development of a boutique hotel, commercial center, and its new headquarters on nearly five acres of land at Bayside Executive Park.
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