The Bahamas Regulator Orders FTX to Transfer Cryptos to Government Wallets

On Thursday, the Securities Commission of the Bahamas said that it has ordered the transfer of all digital assets held by FTX Digital Markets Ltd (FDM) to a government-controlled wallet for 'safekeeping'. The order was issued last Saturday.

"The Securities Commission of The Bahamas ('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 FTX Digital Markets Ltd. ('FDM') to a digital wallet Digital Wallet A digital wallet is a popular mechanism referring to an electronic device, online service, or software program that allows one party to make electronic transactions with another party.This involves the bartering or exchange of digital currency, including cryptocurrency for goods and services. Money can be deposited in the digital wallet prior to any transaction, which also includes an individual's bank account that is linked to the digital wallet. A digital wallet can include more than just digi A digital wallet is a popular mechanism referring to an electronic device, online service, or software program that allows one party to make electronic transactions with another party.This involves the bartering or exchange of digital currency, including cryptocurrency for goods and services. Money can be deposited in the digital wallet prior to any transaction, which also includes an individual's bank account that is linked to the digital wallet. A digital wallet can include more than just digi Read this Term controlled by the Commission, for safekeeping," the regulator stated in the press release.

"Urgent interim regulatory action was necessary to protect the interests of clients and creditors of FDM."

The Commission did not explain why it announced the order publicly after five days or provide any details about the transfer.

Another announcement by the Bahamian regulator last Saturday clarified that it did not order FTX to resume withdrawals for the residents of the islands, contradicting previous claims of the collapsed crypto exchange.

2) The amounts withdrawn comprise a small fraction of the assets we currently hold on hand and we are actively working on additional routes to enable withdrawals for the rest of our userbase. We are also actively investigating what we can and should do across the world.

— FTX (@FTX_Official) November 10, 2022

Jurisdictional War?

FTX Digital Markets Ltd, operated as FTX.com, was headquartered in The Bahamas. The global crypto exchange, its US subsidiary, Alameda Research, and about 130 other affiliates filed for bankruptcy Bankruptcy Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the co Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the co Read this Term in the United States on November 11. Interestingly, the Bahamas-based exchange unit filed for Chapter 15 bankruptcy protection in a New York district court, whereas the other entities sought Chapter 11 bankruptcy protection in Delaware.

The latest announcement by the Bahamas financial market watchdog indicates a tussle between the authorities in the United States and the Bahamas for jurisdictional claims over the collapsed crypto exchange, FTX.

Meanwhile, the collapsed cryptocurrency exchange was hacked last weekend, draining nearly a billion dollars worth of cryptocurrencies to hacker-controlled wallets.

FTX grew fast before it collapsed to rubble. The exchange was valued at $34 billion in its last funding round, attracting funds from major venture capitals. Temasek, Sequoia Capital and Soft Bank's Vision Fund wrote off hundreds of millions of dollars of their investment into the collapsed crypto exchange.