On 12 November the Securities Commission of The Bahamas transferred all assets of FTX Digital Markets (FDM) to a wallet under its control.
Securities Commission of The Bahamas Assumes Control of Assets of FTX Digital Markets Ltd. pic.twitter.com/IzW4PGZSJm
— Securities Commission of The Bahamas (@SCBgov_bs) November 18, 2022
In the evening of November 11 there was an unauthorized withdrawal of more than $477 million from the platform to external addresses. Some of them were blocked by Tether and Kraken.
FTX’s chief counsel Ryne Miller said there was an investigation into anomalies with wallet movements linked to balance consolidation across exchanges. The company’s CEO Sam Bankman-Fried described the incident as a “hacker attack”.
«An urgent temporary regulatory action was necessary to protect the interests of customers and creditors of [FDM]», the Commission said.
On November 15, FTX Digital Markets filed a Chapter 15 petition in the Southern District of New York (SDNY) in accordance with Chapter 15 of the U.S. Bankruptcy Code. The proceeding could shield FDM from asset seizures in the United States during the Bahamian liquidation.
Four days earlier, the parent company FTX, Alameda Research and about 130 affiliated firms filed for bankruptcy in the Delaware court.
«Filing under Chapter 15 without prior notice to SDNY is an egregious attempt to evade the oversight of that court and to isolate FDM from the administration by the other debtors. The latter constitute the overwhelming majority of the rest of the group of companies», said the exchange’s lawyers.
According to the FTX specialists, Bankman-Fried evidently expressed regret about FTX’s bankruptcy filing. He said he should have continued fundraising efforts. This would have kept alive the prospects of “restoring customers’ financial health within a month”.
The former CEO admitted that he intends to win a court battle against Delaware so that proceedings take place in The Bahamas.
«Thus, debtors have credible evidence that the government of The Bahamas is responsible for unauthorized access to debtors’ systems in order to obtain their digital assets», said in a statement the lawyers.
The Securities Commission of The Bahamas did not concede to such accusations and said it was ready to work with other regulators to resolve bankruptcy-related issues for FTX.
On November 16, it emerged that a group of American investors filed a lawsuit against Bankman-Fried.
Fortune’s lawyers said that the US Department of Justice has all it needs to bring criminal charges against Bankman-Fried and other executives of the failed exchange.
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