The Bahamas Securities and Exchange Commission (SCB) has ordered FTX to empty all of its cryptocurrency wallets. According to the decision issued on Thursday (17), the exchange must send all funds to wallets controlled by the government of the Bahamas. The reason for the decision, according to a press release, is customer safety. That is, the Bahamian Justice, this transfer allows the taking of measures to protect customers and their funds. “The Bahamas Securities and Exchange Commission (‘the Commission’), in the exercise of its powers as a regulator acting under the authority of an order made by the Supreme Court of the Bahamas, has taken action to direct the transfer of all FTX digital assets Digital Markets Ltd. (‘FDM’) to a digital wallet controlled by the Commission, for safekeeping,” the statement said. However, SCB said it made the request to FTX last Saturday (12), but only released the information on Thursday. It remains unclear why the Commission made the announcement only five days after determining the transfer. Furthermore, the notice does not explain whether FTX transferred the assets and, if so, when that transfer took place. Christina Rolle, executive director of SCB, did not respond to those queries.
New stage of the FTX case
FTX filed for bankruptcy on Friday (11), in a process that included more than 130 companies. However, many of them were not part of the FTX portfolio of companies, which made the process more chaotic. To top it off, FTX claimed to have suffered a hack attack on the night of November 11 that caused the loss of $600 million in cryptocurrencies. It is not known who carried out this attack or if the hacker returned the stolen funds. FTX US General Counsel Ryne Miller said the exchange was investigating the attack case. Miller also said that the company intended to send its funds to offline wallets, increasing security.
dispute between bankruptcies
FTX Digital Markets has filed for Chapter 15 bankruptcy in the United States. Unlike Chapter 11, Chapter 15 deals with bankruptcies of entities that are headquartered abroad. It should be remembered that FTX DM is headquartered in the Bahamas. Even stranger, FTX DM filed for bankruptcy in the Southern District of New York, while the rest of the companies filed for bankruptcy in the state of Delaware. FTX lawyers said the interim liquidators appointed by the Bahamian court made the request. By adopting the Chapter Recognizing Foreign Bankruptcies, the objective was to avoid US filings for the group. Indeed, the lawyers admitted that US law could consider the attitude as “suspicious”. But they said the FTX case called for an exception to be made. “The filing of the Chapter 15 Proceeding without notice and in New York is a flagrant attempt to avoid oversight by this Court. In addition, it aims to keep FTX DM isolated from the management of the rest of the Debtors, who constitute the vast majority of the rest of the FTX group. Under normal circumstances, this would be inappropriate. But these are not normal circumstances,” the lawyers said. They went on to claim that Sam Bankman-Fried, the former CEO of FTX, was working with the Bahamian government on this effort. “Mr. Bankman-Fried, the co-founder and controlling owner of All Debtors and FTX DM, appears to be supporting efforts to expand the scope of the FTX DM process in the Bahamas, to undermine these Chapter 11 and move debtors’ assets to accounts in the Bahamas , under the control of the Bahamian government,” the document said.
