On Thursday, the Securities Commission of The Bahamas (SCB) made an announcement that it has taken control of digital assets valued at more than $3.5 billion belonging to FTX Digital Markets Ltd., a Bahamian subsidiary of the cryptocurrency exchange FTX. The assets were taken on November 12th, the day after FTX filed for Chapter 11 bankruptcy, due to a risk of imminent dissipation. The SCB has stated that the assets will remain under their exclusive control until a ruling is made by the Supreme Court of the Bahamas.
This seizure has resulted in contention between the SCB and FTX's new CEO, John Ray III, who replaced the disgraced founder, Sam Bankman-Fried. Ray has accused the Bahamian officials of taking the assets with assistance from former FTX leadership and has stated that the authorities have been uncooperative. He has also claimed that Bankman-Fried may have attempted to undermine the U.S. bankruptcy process by transferring company assets to accounts under the control of the Bahamian authorities.
The Bahamian officials have stated that they requested a criminal investigation into FTX on Nov. 9, after then-FTXDM co-CEO Ryan Salame tipped them off in a phone call about alleged transfers of client funds from the exchange to sister company Alameda Research. This investigation is still ongoing.
At this point, the ultimate destination of the seized digital assets is still unknown. It remains to be seen whether the Supreme Court of the Bahamas will decide to return the assets to the customers or to the court-appointed Joint Provisional Liquidators.