Bahamas regulators now confirm they have ordered SBF to move assets

At least some of the millions of dollars in customer FTX funds mysteriously delisted last week were moved at the direction of regulators in the Bahamas. That claim was made in a new filing from the embattled company and confirmed late Thursday by the Securities Commission of the Bahamas itself.

“[There is] credible evidence that the Bahamian government is responsible for directing unauthorized access to the debtors’ systems for the purpose of obtaining digital assets from the debtors – that occurred after these cases began,” the filing read, signed by the new FTX CEO John Ray, famous for handling Enron’s liquidation.

The company went on to say that co-founders Sam Bankman-Fried and Gary Wang were included, saying Bahamian regulators directed the pair to make “certain post-petition transfers” and that such assets were “deposited on FireBlocks under control of [the] Bahamian government.”

SBF’s Alameda moved $89 million in crypto to a new wallet

It was not the first time the accusation was leveled against the island nation, which previously denied it. But this time, Bahamian regulators reversed course.

“The Securities Commission of the Bahamas, in the exercise of its regulatory powers, acting under the authority of an order of the Supreme Court of the Bahamas, has taken action to authorize the transfer of all digital assets of FTX Digital Markets Ltd. to a digital wallet checked by the Commission for safekeeping,” the agency said on Thursday.

The regulator said it was taking these measures to protect the interests of customers and creditors under its jurisdiction.

The back and forth is the latest twist in the battle to secure what’s left of FTX assets the latest developments come as US regulators called Bankman-Fried to testify before a House Financial Services Committee in December to to answer for the collapse of FTX.

In its latest filing, FTX said it has “secured only a fraction of the FTX Group’s digital assets that they hope to recover,” saying it now has $740 million in a new cold wallet. However, they failed to account for three major gaps in the tracked assets:

“These balances exclude cryptocurrency not currently under the Debtor’s control due to (a) at least $372 million in unauthorized transfers initiated as of the petition date, (b) dilutive “coining” of approximately $300 million to FTT tokens by an unauthorized source after the petition date, and (c) the failure of the co-founders and possibly others to identify additional wallets believed to contain debtors.”

Hundreds of millions of dollars have been taken from FTX overnight in ‘unauthorized’ transfers

The unauthorized transfers were spotted on November 11, the same day FTX went bankrupt, and were tracked in real time by blockchain sleuths on Twitter, sparking a flurry of speculation. At the time, the transfers, which totaled $650 million, were thought to be part of a massive hack targeting the bankrupt company.

At 2 p.m. EST that night, FTX general counsel Ryne Miller called the transfers “unauthorized” and said that FTX had begun moving the company’s remaining assets into cold storage to “limit the damage.”

The Securities Commission of the Bahamas had previously issued a press release saying it was taking action to freeze FTX Digital Markets’ assets. That same day, FTX released its own statement saying it had begun allowing the withdrawal of Bahamian funds to comply with the country’s regulators.

But as rumors spread that the unauthorized transfers were the work of Bahamian authorities, the Securities Commission of the Bahamas issued a statement pushing back FTX’s claim, saying that “it has not instructed FTX Digital Markets Ltd. to prioritize, authorized or proposed. of withdrawals for Bahamian clients.”

The statement acknowledged that such action could constitute “voidable preferences” under bankruptcy rules and require “recovery of funds from Bahamian customers.”

“In any event, the Commission does not condone preferential treatment of any investor or customer of FTX Digital Markets Ltd. or otherwise,” the agency said.

So, the people or groups responsible for the unauthorized transfers remain unknown, but blockchain watchers have posted their theories on Twitter, attributing some of the recordings to “white hat FTX employees” and others “perhaps controlled by [Bankman-Fried and Wang].”

FTX’s Bahamian subsidiary, FTX Digital Markets Ltd., filed for Chapter 15 bankruptcy proceedings on Nov. 15, requesting cooperation between U.S. courts and foreign courts as the United States was involved in the foreign bankruptcy proceedings.

Bahamas regulators want control over FTX bankruptcy proceedings

The Securities Commission of the Bahamas says it does not believe FTX Digital Markets, Ltd., is a party to FTX’s US Chapter 11 bankruptcy proceedings. The agency says they will work with other regulators and authorities “in multiple jurisdictions” to address matters affecting FTX Digital Markets’ creditors, customers and stakeholders.

Brian Simms, a partner at the Nassau-based law firm of Lennox Paton, was appointed provisional liquidator. He said FTX was not authorized to file for bankruptcy in the US – and asked that FTX’s US assets be turned over to Bahamian liquidators.

Due to the collapse of FTX and the subsequent contagion spreading across crypto, regulators worldwide are calling for tighter regulation of crypto.

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