NASSAU, BAHAMAS — The Securities Commission has once again taken issue with statements by new FTX CEO John Ray III, stating that he appears intent only on making headlines and advancing “questionable agendas”.
The regulator accused Ray of referring to redacted email correspondence between former FTX CEO Sam Bankman-Fried and Bahamian officials in a bid to cast aspersions on local proceedings.
“Those redactions were designed to create a false impression of communications between Mr Bankman-Fried and the Commission,” the Commission said.
“These redactions are disturbing as Mr Ray is aware that the full email reveals Mr. Bankman-Fried’s acknowledgment that he had not briefed the Securities Commission.”
The Commission pointed out that it was the first regulator in the world to take “strong, decisive action” to protect the customers and creditors of FTX – regardless of where they may be located.
“Every action taken by the Securities Commission of The Bahamas was in strict accordance with our country’s legislation and with orders made by the Supreme Court of The Bahamas,” it stated.
“These actions included securing the transfer of potentially commingled digital assets of FTX Digital Markets Ltd. and affiliates to a secure location under the authority of an Order issued by the Supreme Court of The Bahamas. The Commission holds those assets as trustee only (under Bahamian Law), and they will be ultimately distributed, to creditors and clients of FTX, wherever they may be located, in accordance with the court’s direction,” the Commission said.
The Commission previously addressed improper distributions to Bahamian citizens in a statement last month.
“The Commission reaffirms its prior statement and notes that to the extent improper distributions were made to Bahamian citizens, such distributions will be subject to the appropriate clawback actions under the law,” the SCB added.
The regulator added that it “also finds it disturbing that, either deliberately or through ignorance, Mr Ray’s filings and communications continue to wrongfully confuse as one, the actions of the Government of The Bahamas, the Securities Commission of The Bahamas, and the Court Appointed/Court Supervised Joint Provisional Liquidators.”
The Commission said that it continues to conduct a comprehensive and diligent investigation into the causes of FTX’s failure, working in cooperation with law enforcement and regulatory authorities both in The Bahamas and other jurisdictions. It added that it will make all appropriate findings and recommendations, in the appropriate forum, at the conclusion of its investigation.
“Persons who are found to have engaged in misconduct will be held accountable in accordance with Bahamian law,” the statement continued.
“Unfortunately, it has been necessary for the Securities Commission to make a request to Mr Ray’s representatives to not obstruct that investigation. Mr Ray has not once reached out to the Securities Commission to discuss any of his concerns before airing them publicly.”
The joint provisional liquidators for FTX’s Bahamian subsidiary, FTX Digital Markets, have filed an emergency motion in a Delaware bankruptcy court in a bid to gain access to company records.
In court documents filed last Friday, the liquidators said that they urgently require access to certain electronic records related to FTX Digital’s property and financial affairs so they can “identify the company’s assets, investigate potential claims and maintain value available to FTX Digital’s creditors.”
FTX Digital Markets was placed into provisional liquidation by the Supreme Court of The Bahamas on November 10.
The Supreme Court appointed Brian Simms KC, of Lennox Paton, Kevin Cambridge, of PwC Bahamas, and Peter Greaves, of PwC Hong Kong, as the Joint Provisional Liquidators. FTX Trading Ltd filed for Chapter 11 bankruptcy in the US Bankruptcy Court for the District of Delaware on November 11.
The liquidators in court filings on Friday claimed that access to this information was “abruptly” cut off on or about November 12, 2022, and the US debtors – FTX Trading and its 134 affiliates – have the ability to restore it.
