Bahamas seized $3.5 billion from FTX to ‘protect customers’

The Bahamas Securities Commission has announced it took custody of over $3.5 billion worth of FTX deposits.

According to a press release the BSC published on Thursday, the regulator moved to seize the assets on 12 November, just a day after the cryptocurrency exchange filed for bankruptcy. The seizure was ordered by the Supreme Court of the Bahamas, but was sealed.

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FTX assets held to ‘protect the public’

FTX filed for bankruptcy on 11 November 2022, and shortly lost $372 million in various tokens in a hack that’s now the subject of investigation in the US. The Bahamas Securities Commission swung into action shortly.

“On 12 November 2022, the Commission, in the exercise of its powers as regulator acting under the authority of an Order made by the Supreme Court of The Bahamas, took the action of directing the transfer of all digital assets of under the custody or control of FTXDM or its principals, valued at more than US$3.5 billion, based on market pricing at the time of transfer, to digital wallets controlled by the Commission, for safekeeping.”

The Bahamas Securities Commission via a press release on 29 December, 2022.

According to the Bahamian regulator, the swift action leading to the seizure of FTX Digital Markets’ assets was an “exercise of its obligation to “protect the public”.”

The assets will remain with the regulator until the Bahamas Supreme Court orders their release to FTX customers and creditors, the Commission said.

Former FTX CEO Sam Bankman-Fried was arrested in the Bahamas early this month, before being extradited to the United States where he faces multiple criminal charges, including wire fraud and money laundering. He is out on a $250 million bail and is set to be arraigned on 3 January 2023 even as investigations into the crypto exchange’s implosion continues.

Caroline Ellison, the former CEO of FTX trading arm Alameda Research, and Gary Wang, co-founder of FTX, have both been charged in the US. They have pleaded guilty to multiple counts and were reportedly cooperating with US prosecutors.