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0 CommentsThe Securities Commission of the Bahamas has been holding on to more than $3.5 billion worth of FTX customer assets since Nov. 12, according to a statement from the regulator released late on Dec. 29. Customer assets were drained from FTX due to a security breach after the crypto exchange filed for bankruptcy protection on Nov. 11.
The decision to take custody of the funds, specifically from the crypto exchange’s FTX Digital Markets Ltd, followed security concerns. Hours after the collapsed crypto exchange filed for bankruptcy protection, between $370 million and $400 million in crypto assets were stolen from the exchange’s wallets. The hack is currently under investigation by the US Department of Justice.
The funds are stored on “digital wallets controlled by the Commission, for safekeeping,” the Commission wrote in the statement. The assets will remain in the Commission’s control until the Bahamas Supreme Court orders their return to FTX customers and creditors.
Previously, the Bahamian regulator has been scrutinized over its role in the FTX collapse and subsequent legal proceedings.
The commission wanted to handle insolvency proceedings for FTX in the Bahamas. But FTX’s US lawyers contested the move, alleging in a Nov. 17 filing that the regulator coordinated with Bankman-Fried to gain “unauthorized access” to FTX systems to transfer digital assets to its own custody.
In response, the Bahamian regulator said that the claims were “inaccurate,” and that its decision to move the funds was taken to protect the interests of clients and investors. The regulator stated that it transferred FTX Digital Markets’ assets to a digital wallet in its control in November.
Crypto exchange FTX filed for Chapter 11 bankruptcy protection in the US on Nov. 11 after it unraveled following a CoinDesk report that revealed Alameda Research, an affiliated trading firm, was largely backed by FTT, tokens that FTX created out of thin air.
