Bahamas Securities Regulator Confirms It Ordered FTX to Transfer Assets to Government Wallet

A person is giving a dollar to a huge hands holding a wallet above at a beach with palms
  • The Securities Commission of the Bahamas (SCB) said that it ordered the defunct crypto exchange FTX to transfer all of its assets to a government-controlled wallet.
  • The SCB gave no details about its wallet or the transactions related to its order.
  • The SCB claimed that FTX Digital Markets, an FTX subsidiary in the Bahamas, isn’t part of the FTX Group Chapter 11 bankruptcy filing in the U.S.
  • The new leadership of FTX believes that the Bahamas government directed unauthorized access to its systems to move the assets.
  • The wallets related to what was once believed to be a hack now hold almost $400 million worth of various tokens, including 228 thousand ETH.

The Securities Commission of the Bahamas (SCB) announced that it ordered bankrupt exchange FTX to move its crypto assets to a government-controlled wallet. The regulatory body revealed this in a statement on Twitter on Thursday.

SCB said that it ordered FTX Digital Markets to transfer all of its assets to the agency’s digital wallet. This was done to protect clients and creditors on November 12, a day after the FTX Group filed for Chapter 11 bankruptcy in the U.S.

“The Securities Commission of The Bahamas, in the exercise of its powers as regulator acting under the authority of an Order made by the Supreme Court of The Bahamas, took the action of directing the transfer of all digital assets of FTX Digital Markets Ltd. (FDM) to a digital wallet controlled by the Commission, for safekeeping. Urgent interim regulatory action was necessary to protect the interests of clients and creditors of FDM,” the SCB stated.

The SCB also said that it believes that FTX Digital Markets, a subsidiary of FTX based in the Bahamas, isn’t part of FTX Group’s bankruptcy proceedings in the U.S. Indeed, FTX Digital Markets filed for Chapter 15 bankruptcy on November 15. This was days after millions of dollars started flowing from FTX’s wallets to a wallet controlled by the SCB.

At the time, the massive moves were labeled as a hack, as confirmed by FTX itself on Twitter. Former FTX CEO Sam Bankman-Fried reiterated in private leaked messages that there were two possibilities. The millions of dollars in various coins and tokens leaving FTX was either a hack or an inside job by a former employee.

However, the bankrupt exchange released a filing yesterday. It said it had sufficient evidence to believe that the government of the Bahamas directed unauthorized access to the exchange’s systems. It did this to withdraw its assets after it declared bankruptcy in the U.S.

It’s also unclear which transactions and which assets specifically the two parties are referring to. The wallet associated with the draining of FTX’s funds has made numerous transactions and swaps. It now holds about $400 million in various crypto assets, including ETH, BNB, DAI, and others. Additionally, it holds over 228 thousand ETH coins. They are worth around $300 million, making it the 36th largest ETH holder in the world.

On the Flipside

  • It’s unclear why the SCB announced the takeover of FTX’s assets five days after the fact.
  • It’s also unclear which transactions and assets specifically they refer to.

Why You Should Care

The FTX debacle continues to unfold. The new revelations show that the Bahamian authorities directed FTX to transfer its assets to the government. This indicates a growing disagreement between the U.S. and the Bahamas regulators. If anything, this story is only going to get more interesting as time goes on and new details are uncovered.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

Author

Rue Abernai is a blockchain content writer focused on Web 3.0 domains, DeFi, and Ethereum Layer-2s. Rue believes blockchain technology has the potential to transform how we see and interact with society, economy, and culture. Rue spends his spare time hiking, playing with his dog, and reading. He has been active in blockchain and cryptocurrencies since 2020.