• The Securities Commission of the Bahamas has been temporarily holding more than $3.5 billion in FTX client assets.
• FTX, Alameda Research, and more than 130 other affiliates filed for bankruptcy in the United States, leading the local FTX organization to turn over management of the client assets it had been holding to the Bahamian financial market regulator.
• The regulator sought and received a court injunction to protect digital assets while exercising its regulatory authority.
The Securities Commission of the Bahamas has announced that it is temporarily holding more than $3.5 billion in assets belonging to customers of the now-defunct crypto exchange FTX. The announcement comes as FTX and its affiliates, including Alameda Research, filed for bankruptcy in the United States.
In light of the bankruptcy filing, the local FTX organization turned over management of the client assets it had been holding to the Bahamian financial market regulator. This was done in order to ensure that the digital assets remain safe and out of the hands of FTX co-founder Sam Bankman-Fried and former CTO and co-founder Gary Wang.
The regulator found a considerable risk of impending dissipation regarding the digital assets in FTXDM’s custody or control, which would be detrimental to its clients and creditors. As a result, the commission sought and received a court injunction to protect digital assets while exercising its regulatory authority. This injunction prevents Bankman-Fried and Wang from accessing the assets.
The commission also noted that the theft of at least $372 million worth of crypto during a cyberattack on the defunct exchange ultimately led it to seize FTX customers‘ assets for safekeeping. It is currently awaiting orders from the Bahamas Supreme Court to return the funds to customers and creditors, or the liquidation administrator.
The news of the Bahamas Securities Commission holding the FTX customer assets comes as a relief to many investors who were worried about their funds being misappropriated. The Commission’s action provides reassurance that their assets will remain secure until further notice.