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Home BUSINESS

Bahamas Securities Commission Freezes FTX’s Assets

BlockNews Team by BlockNews Team
November 11, 2022
in BUSINESS, CRYPTO, MEDIA
Reading Time: 4 mins read
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Authorities in the Bahamas, where FTX.com is headquartered, have frozen the assets of its local trading company and “related parties,” fueling speculation that Sam Bankman Fried’s crypto empire is on the verge of collapse. 

According to the Securities Commission of The Bahamas (SBH), FTX’s assets could not be moved without the approval of a Supreme Court-appointed liquidator. This followed a move by the country’s securities regulator to freeze the assets of FTX Digital Markets (FDM) and “related parties” on November 10 before suspending FTX’s registration in the Bahamas. 

FTX Digital Markets (FDM) is the Bahamian branch of the FTX exchange, while FTX US is a separate United States-based entity. 

Bahamian Authority Calls For Order

In an SCB statement, the securities regulator acknowledged awareness of “public statements suggesting that clients’ assets were mishandled, mismanaged, or transferred to Alameda Research.” Alameda is a trading company founded by FTX CEO Sam Bankman-Fried (aka SBF). The public statements and a leaked balance sheet from the company proved that Alameda held vast amounts of the FTX exchange’s native token, FTT.

There have also been rumors that the FTX exchange was funding trades using funds belonging to users, and upon discovery of this news, a “bank run” ensued on the FTX exchange, causing a liquidity crisis. While determining the next course of action, the SCB has stripped FTX leadership of its mandate and put the company on provisional liquidation, a move targeted at preserving assets and achieving exchange stability. 

In the statement, the Bahamian Supreme Court has appointed a temporary liquidator saying:

“No asses of FDM, client assets, or trust assets held by FDM can be transferred, assigned, or otherwise dealt with, without the written approval of the provisional liquidator.” 

The SCB has committed to working with the appointed liquidator on a discovery set to obtain the best possible outcome for customers and other FTX stakeholders. Attempts to excite comments from FTX and the SCB must be more fruitful. 

FTX Under U.S. Regulator and Administration Microscope

The debacle surrounding Sam Bankman-Fried’s empire has attracted the attention of regulators in the U.S., with the House of Representatives Financial Services Committee chair, Maxine Waters, calling for improved customer protection and more federal oversight of cryptocurrency trading platforms. 

“Although FTX’s U.S.-facing company is reportedly operational, FTX’s FTT tokens are now worthless, and even worse, FTX.com customers are completely unable to access their funds. Now more than ever, it is clear that there are major consequences when cryptocurrency entities operate without robust federal oversight and protections for customers.”

It follows that United States President Joe Biden is following the story, according to White House Press Secretary Karine Jean-Pierre, who alluded to FTX’s liquidity crunch during a White House statement:

“The administration […] has consistently maintained that without proper oversight, cryptocurrencies risk harming everyday Americans,” said Jean-Pierre. “The most recent news further underscores these concerns and highlights why prudent regulation of cryptocurrencies is necessary.”

Jean-Pierre also noted that the administration and financial agencies would “closely monitor” developments in the crypto market. The White House statement is the latest response in a chain of reactions from lawmakers and financial regulators in the U.S.

In a November 10 Tweet, Minnesota Representative Tom Emmer has also accused Securities and Exchange Commission Chair Gary Gensler of collaborating with FTX CEO Sam Bankman-Fried to establish a “regulatory monopoly.”

“Interesting. @GaryGensler runs to the media while reports to my office allege he was helping SBF and FTX work on legal loopholes to obtain a regulatory monopoly. We’re looking into this.

According to the Republican lawmaker, his team was probing the SEC’s chairman for alleged collaboration with SBF and FTX, citing reports presented to his office as evidence without providing further details. 

Disclaimer: BlockNews provides independent reporting on crypto, blockchain, and digital finance. All content is for informational purposes only and does not constitute financial advice. Readers should do their own research before making investment decisions. Some articles may use AI tools to assist in drafting, but every piece is reviewed and edited by our editorial team of experienced crypto writers and analysts before publication.
Tags: BahamasBusinessFTX
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