Hailey Lennon, partner at Brown Rudnick, discusses the potential regulatory loopholes emerging as the FTX collapses and lawmakers push for increased crypto regulation.
The Bahamas Securities Commission said Thursday that the agency has seized all digital assets under the control of FTX’s Bahamian subsidiary, FTX Digital Markets Ltd. – more than 3.5 billion dollars – after “for storage”. cryptocurrency exchange collapse
The regulator said in a press release that the funds were transferred to digital wallets under its sole control in November. A day after FTX filed for Chapter 12 bankruptcy, disgraced founder Sam Bankman-Fried revealed that the assets under FTXDM’s control were at “advanced risk of collapse.” cyber attacks on the system.
The Bahamas’ securities regulator announced on Thursday that it had seized more than $3.5 billion in digital assets managed by FTX Digitial Markets Ltd. after the cryptocurrency exchange crash. ((AP Photo/Marta Lavandier, File)/AP Newsroom)
FTX CLIENTS CLAIM A CLASS THAT SAYS THE ASSETS ARE ALLOWED TO THEM
SCB said the funds were being held “temporarily” pending orders from the Supreme Court of the Bahamas to release the assets to “customers and creditors who have them” or to a court. It appointed Joint Provisional Liquidators (JPL) to be responsible for opening the FTXDM.
The seizure of funds by the Bahamian comptroller has sparked a dispute between the agency and new FTX CEO John Ray III. Replaced Bankman-Fried filed for Chapter 11 bankruptcy in the United States after taking control of the firm. Bahamas-based FTXDM separately filed for Chapter 15 bankruptcy in Chapter 11 bankruptcy, and both sides have so far butted heads in the litigation.
FTX Cryptocurrency Derivatives Exchange CEO John Ray III speaks during a House Financial Services Committee hearing investigating the collapse of FTX in Washington, D.C., Tuesday, Dec. 13, 2022. (Al Drago/Bloomberg via Getty Images/Getty Images)
US INVESTIGATING HOW $370 MILLION DISAPPEARED AFTER FTX BANKRUPTCY
The Bahamas Security Commission acknowledged last month that FTXDM’s assets had been seized, but at the time did not put a dollar amount on the figure.
During his time Testimony before Congress In mid-December, Ray accused Bahamian officials of receiving the funds with the help of former FTX leadership and claimed authorities were not cooperating.
“We’ve repeatedly asked them for clarity on what they’re doing,” Ray said of Bahamian officials. “They shut us down.”
Sam Bankman-Fried leaves Federal Court in New York on Thursday, December 22, 2022. The former CEO of FTX and Alameda has been released on $250 million bail. (Charles Guerin/Abaca for Fox News Digital/Fox News)
regulatory expert: FTX ‘ACQUIRED JURISDICTION’ to accommodate LAX regulatory environment
Ray also said Bankman-Fried, who was arrested hours before the trial, appeared several charges In connection with the collapse of FTX, the company attempted to circumvent US bankruptcy proceedings by transferring its assets to accounts controlled by Bahamian authorities.
Bahamian officials said in court documents that they requested a criminal investigation into the FTX in November. After 9, the general director of FTXDM Ryan Salame informed them in a phone call regarding the transfer of client funds from the exchange to sister company Alameda Research.
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FTX investor Mark Miller discusses the results of FTX after losing $25,000 in the crash.
