Brown Rudnick companion Hailey Lennon discusses the attainable regulatory holes delivered to mild by FTX’s collapse and lawmakers’ push for elevated crypto laws.
The Securities Fee of the Bahamas stated Thursday the company seized all digital belongings underneath the management of FTX’s Bahamian subsidiary FTX Digital Markets Ltd. — to the tune of greater than $3.5 billion — “for safekeeping” following the cryptocurrency change’s collapse.
The regulator stated in a press launch that the funds had been transferred to digital wallets underneath its unique management on Nov. 12, the day after FTX filed for Chapter 11 chapter, after figuring out “there was a big threat of imminent dissipation” of the belongings underneath FTXDM’s management primarily based on info disgraced founder Sam Bankman-Fried supplied regarding cyberattacks on the system.
The securities watchdog of the Bahamas revealed Thursday it seized upwards of $3.5 billion in digital belongings managed by FTX Digitial Markets Ltd. after the crypto change collapsed. ((AP Photograph/Marta Lavandier, File) / AP Newsroom)
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The funds are being held “on a short lived foundation,” the SCB stated, whereas it waits for directions from the Supreme Courtroom of the Bahamas on whether or not the belongings needs to be “delivered to the purchasers and collectors who personal them” or to the court-appointed Joint Provisional Liquidators (JPLs) in command of unwinding FTXDM.
The seizure of the funds by the Bahamian watchdog has been a supply of competition between the company and FTX’s new CEO, John Ray III, who changed Bankman-Fried and filed FTX’s Chapter 11 chapter within the U.S. after taking management of the agency. Bahamas-based FTXDM individually filed a Chapter 15 chapter which has been rolled into the Chapter 11 – and either side have been butting heads all through the proceedings so far.
John Ray III, chief govt officer of FTX Cryptocurrency Derivatives Change, speaks throughout a Home Monetary Companies Committee listening to investigating the collapse of FTX in Washington, DC, Tues., Dec. 13, 2022. (Al Drago/Bloomberg by way of Getty Photographs / Getty Photographs)
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The Safety Fee of The Bahamas admitted final month to seizing the belongings of FTXDM, however didn’t put a greenback quantity on the determine on the time.
Throughout his testimony earlier than Congress in mid-December, Ray accused the Bahamian officers of taking the funds with the help of former FTX management, and claimed the authorities had been being uncooperative.
“We have repeatedly requested them for readability about what they have been doing,” Ray stated of the Bahamian officers. “We have been shut down by them.”
Sam Bankman-Fried leaves Federal Courtroom in New York Metropolis on Thursday, December 22, 2022. The previous CEO of FTX and Alameda has been launched on $250M bail. (Charles Guerin/Abaca for Fox Information Digital / Fox Information)
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Ray additionally stated it seems Bankman-Fried, who was arrested hours earlier than the listening to on a number of expenses associated to the FTX collapse, had tried to undermine the U.S. chapter course of by transferring firm belongings to accounts underneath the management of the Bahamian authorities.
Bahamian officers stated in court docket filings that they requested a felony investigation into FTX on Nov. 9 after then-FTXDM co-CEO Ryan Salame tipped them off in a telephone name about alleged transfers of consumer funds from the change to sister firm Alameda Analysis.
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FTX investor Mark Miller discusses the fallout from FTX after dropping $25,000 within the collapse.
