Bahamas Regulator Freezes FTX Assets


A Bahamas securities regulator on Thursday froze the assets of the local subsidiary of beleaguered cryptocurrency exchange FTX. 

The Securities Commission of The Bahamas also took the first step into forcing the local subsidiary, FTX Digital Markets (FDM) into what’s known as provisional liquidation — where assets will be safeguarded for the time being, as opposed to distributing the company’s assets to creditors. 

FDM’s registration — which permits the business unit to operate in The Bahamas — has been canceled by the regulator in a bid to “proactively” deal with the fast-developing situation, according to a statement from the regulator. 

FDM is the Bahamian subsidiary of parent FTX Trading Ltd., owner and operator of FTX writ-large. FTX and its subsidiaries do not account for the US arm of CEO Sam Bankman-Fried’s businesses, FTX.US. 

The move follows reporting demonstrating that FTX and sister trading firm Alameda Research had been commingling assets — namely the exchange’s native FTT token — to prop up Alameda’s balance sheet. Industry participants and regulators since have been parsing whether FTX has been improperly trading customer funds via Alameda. 

“The commission is aware of public statements suggesting that clients’ assets were mishandled, mismanaged and/or transferred to Alameda Research,” the statement said. 

Based on the commission’s preliminary findings, it appears the arrangement, without client consent, could be potentially illegal, the watchdog said.  As such, the regulator appointed Brian Simms, senior partner and head of litigation and insolvency at law firm LennoxPaton, to oversee its inquiry. 

FDM’s executives, including Bankman-Fried, have been stripped of their operational powers, while assets belonging to both FTX and its clients are not allowed to be moved without Simms’ prior approval. 

“The commission determined that the prudent course of action was to put FDM into provisional liquidation to preserve assets and stabilize the company,” the statement said. “The commission is committed to working with the provisional liquidator to endeavor to obtain the best possible outcome for the customers and other stakeholders of FTX.”

The post Bahamas Regulator Freezes FTX Assets appeared first on Blockworks.

Jerry Rolon
After working for 7 years as a Internet Marketer, Jerry now aims to explore the journalistic side of Internet. With his impeccable knowledge in this domain, he churns out some of the best news articles from the internet niche.

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