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Bahamas regulator seized $3.5 billion of FTX crypto assets

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The FTX logo on a laptop screen.

Andrey Rudakov | Bloomberg via Getty Images

The Securities Commission of The Bahamas says it seized $3.5 billion price of cryptocurrency from collapsed crypto exchange FTX.

In a media release late Thursday, the watchdog confirmed the whole sum taken from FTX’s Bahamian subsidiary, FTX Digital Markets, and added that the funds were moved into its own digital wallets “for safekeeping.”

The regulator had previously confirmed it was holding a few of FTX’s digital assets but didn’t specify the quantity.

The funds were valued at over $3.5 billion, based on market pricing on the time of transfer, based on the Commission. The transfer took place on Nov. 12, the day after FTX filed for Chapter 11 bankruptcy protection within the U.S.

The Bahamian securities commission said the funds are being held on a “temporary basis” until it’s directed by the country’s Supreme Court to deliver them to customers and creditors, or to liquidators of the insolvency estate.

The regulator said it took the funds after receiving information from Sam Bankman-Fried, FTX’s disgraced co-founder, concerning cyberattacks on the systems of FTX’s Bahamian unit.

There was “significant risk of imminent dissipation” of the assets under FTX Digital Markets’ control, it said.

After FTX filed for bankruptcy, it was targeted in a suspected hack that saw $477 million drained from the firm’s crypto wallets. The identity of the perpetrator is just not yet known.

The Bahamian regulator has been scrutinized over its role within the FTX collapse and subsequent legal proceedings.

The Commission desired to handle insolvency proceedings for FTX within the Bahamas. But FTX’s U.S. lawyers contested the move, alleging that it coordinated with Bankman-Fried to transfer FTX digital assets to its own custody.

U.S. lawyers for FTX had refused to present liquidators appointed by the Bahamian court access to the corporate’s computer systems, saying: “We don’t trust the Bahamian government.”

FTX’s former CEO Bankman-Fried was arrested within the Bahamas and subsequently extradited to the USA, where he’s awaiting trial on charges of fraud, conspiracy to commit money laundering and conspiracy to defraud the U.S. and violate campaign finance laws.

He was released last week on $250 million bail, and has reportedly been receiving visitors in his California family home, including “The Big Short” creator Michael Lewis.

Bankman-Fried is anticipated to be arraigned and enter a plea in federal court in Manhattan on Jan. 3, based on a Reuters report.

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