This is news that will no doubt please customers and creditors of Sam Bankman-Fried’s crypto empire.
Authorities in the Bahamas, where the disgraced former emperor of the crypto space lived and where FTX was headquartered, just announced that they have seized significant assets from the bankrupt cryptocurrency exchange.
The Bahamas Securities Commission said it seized those assets as soon as Bankman-Fried, known by the initials SBF in the crypto industry, filed for Chapter 11 bankruptcy for his empire on November 1. 11.
The regulator says it seized FTX’s assets for security reasons so they don’t mysteriously disappear.
Based on information provided by Sam Bankman-Fried to the regulator regarding the cyberattacks that took place on FTX’s systems, “the Commission has determined that there is a significant risk of imminent dissipation with respect to digital assets in the custody or custody of control of FTXDM to the detriment of its customers and creditors,” the authority said in a Press release.
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The Bahamas Commission holds $3.5 billion
“As a result, in the exercise of its regulatory powers, the Commission has sought and obtained a court order to protect digital assets held by or in the custody or control of FTXDM or its principals by transferring them to digital wallets secured under the exclusive control of the Commission.
The regulator on Nov. 12 said it had therefore made the decision to order the transfer of all digital assets in the custody or control of FTX worth more than $3.5 billion, on the based on market prices at the time of transfer, to Commission-controlled digital wallets for safekeeping.
“Digital assets transferred on November 12, 2022 to digital wallets under the exclusive control of the Commission are held by the Commission on a temporary basis, up to the Bahamas,” the regulator said.
He added that: “The Supreme Court orders the Commission to return them to the customers and creditors who own them.”
The regulator, however, cautioned that “although some token protocols may require the burning of old tokens and the simultaneous minting of new replacement tokens to complete the transfer, in no case did the process involve the creation of additional tokens.”
The Bahamian regulator’s announcements are good for FTX’s customers and creditors, but it’s unclear if they get that money back immediately because FTX’s bankruptcy is being handled in the United States under US law, while there there is a liquidation of the company in the Bahamas.
In addition, regulators reported that there was a mix of FTX client funds with those of FTX and its sister company Alameda Research, a hedge fund which also serves as a trading platform for institutional investors. Alameda was also part of Bankman-Fried’s empire.
FTX founder faces criminal and civil allegations
FTX, which was founded in May 2019, was unable to meet withdrawal requests from worried and panicked customers. Bankman-Fried is accused of loaning $10 billion in FTX client funds to Alameda Research when the two companies were supposed to be independent.
The former trader faces a series of criminal and civil charges from regulators. SBF was extradited to the United States on December 12. 21 by the Bahamian authorities.
He was released after his parents, both Stanford University law professors, signed a $250 million recognition bond pledging their California home as collateral. Two other friends with significant assets have also signed, according to dispatches.
“Bankman-Fried orchestrated a massive, years-long fraud, embezzling billions of dollars of trading platform client funds for his own personal benefit and to help grow his crypto empire,” the Security and Exchange Commission (SECOND) alleges in his civil complaint.
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