FTX’s granting of a peculiar withdrawal window for Bahamian accounts while the rest of the world was locked out has attracted the attention of the US Congress.
Veteran insolvency expert John Ray, who took over as CEO to handle the exchange’s restructuring, testified during a Congressional committee meeting on Tuesday on FTX’s absence of record keeping and the status of the recovery of funds.
Ray revealed that FTX’s restructuring team has so far secured more than $1 billion in assets. However, when US Rep. William Timmons asked about money withdrawn from the exchange by Bahamian citizens, Ray didn’t offer as many details.
But Timmons revealed that Congress has a list of 1,500 Bahamians who took advantage of a window of about 25 hours between Nov. 10 and 11 to pull funds. FTX is headquartered in the Bahamas, where many key employees lived, including Bankman-Fried and Alameda Research CEO Caroline Ellison.
FTX.com had paused withdrawals for the rest of the world at the time, a move Bankman-Fried claimed local regulators had requested (they later denied that was the case).
Some non-Bahamian residents, desperate to retrieve their frozen assets, ended up finding a loophole to do so via FTX’s NFT platform, which was left online. Bahamian residents were said to be listing very expensive — but otherwise unremarkable — NFTs, which stranded users would buy with their full balances.
This allowed local accounts to withdraw the cash in full on their behalf. Blockworks reported at the time that the NFTs that sold for inflated prices added up $50 million in volume on the marketplace using this scheme.
The total amount allegedly taken out from Bahamian accounts is $100 million, according to Timmons, who asked Ray, “You plan on going after that money, correct?”
“We’ll investigate every potential course of action,” Ray answered. It’s still unclear how much of the funds were withdrawn by actual Bahamian residents.
When pressed on the matter again, Ray said that they will “certainly pursue every course of action to recover” the funds.
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Source: https://blockworks.co/news/1500-bahamian-ftx-accounts-withdrew-funds