February 8, 2023

Bahamas Regulators Ordered FTX To Safeguard Its Crypto Assets

The Securities Commission of the Bahamas gave FTX Digital Markets Ltd. (FDM) a directive, the commission said on Thursday. The directive instructed FDM to store its digital assets in a wallet under government control for “safekeeping.” The preceding Saturday saw the delivery of the order.

The Commission Mandated the Transfers

The regulator included some statements on FDM in its press release. The commission ordered the transfer of all FTX Digital Markets Ltd.’s (FDM) digital assets. The transfer was mandated to be made to a digital wallet under the commission’s authority for storage.

The press statement also said that the commission’s order complied with the ruling of The Bahamas’ Supreme Court. Swift temporary regulatory action was crucial to safeguarding the clients and creditors of FDM. However, the commission did not mention the transfer or why the order was made public five days later.

According to a notice sent on Saturday, the Bahamian regulator did not mandate FTX begin withdrawals for island residents. This directly contradicts the claims made by the now-defunct cryptocurrency exchange.

Jurisdictional Conflict

The company running FTX.com is based in the Bahamas; it is known as FTX Digital Markets Ltd. The international cryptocurrency exchange filed a bankruptcy filing in the United States on November 11. This comprised 130 more affiliates in addition to its US subsidiary Alameda Research.

Intriguingly, the Bahamas exchange unit petitioned a New York court under Chapter 15 bankruptcy. In parallel, its other companies filed for Chapter 11 bankruptcy protection in Delaware. FTX was a cryptocurrency exchange based in the Bahamas. However, the newest statement from the country’s financial market authorities suggests a conflict over jurisdictional rights related to the exchange’s bankruptcy.

Over the weekend, a hacker accessed the shutdown cryptocurrency exchange and stole $1 billion worth of assets. FTX had a high growth rate until it was destroyed. The exchange’s estimated value at the most recent financing round was $34 billion. This enabled it to get funding from well-known venture capital companies.

Unfortunately, Sequoia, Temasek, and Soft Bank’s Vision Fund all took huge losses when the cryptocurrency exchange firm they invested in went down.

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