FTX ordered to indemnify and reimburse Bahamas for assets safekeeping Oluwapelumi Adejumo · 4 hours ago · 1 min read
The Bahamas regulator said all expenses it incurs will be approved by the country’s supreme court and are subject to reimbursement by FTX.
1 min read
Updated: November 22, 2022 at 1:10 pm
Cover art/illustration via CryptoSlate
Bahamas Supreme Court on Nov. 21 ordered bankrupt crypto exchange FTX to indemnify and reimburse the Securities Commission of Bahamas (SCB) for expenses it will incur while safekeeping its digital assets.
Securities Commission of The Bahamas Secures Court Order For Right of Indemnity and Reimbursement. https://t.co/j7AAxZhdrQ pic.twitter.com/aBQLJtYQ8q
— Securities Commission of The Bahamas (@SCBgov_bs) November 22, 2022
On Nov. 18, the watchdog revealed that it directed the embattled firm to transfer crypto assets under its control to the Commission’s wallet on Nov. 12.
According to the Nov. 21 press statement, the SCB said:
“[The court order]confirms the Commission is entitled to be indemnified under the law and FDM shall ultimately bear the costs the Commission incurs in safeguarding those assets for the benefit of FDM’s customers and creditors, in a manner similar to other normal costs of administering FDM’s assets for the benefit of its customers and creditors.”
It added that no payment would be made to its coffers without the court’s approval.
The control of FTX’s assets has generated several controversies within the crypto community. Earlier this week, the FTX hacker wallet began dumping around $60 million worth of Ethereum (ETH) for Bitcoin (BTC). Reports also emerged that the hacker was spoofing the meme coin transactions.
Meanwhile, the Bahamian regulator had earlier denied granting FTX the right to prioritize the withdrawal of Bahamian assets.
Posted In: FTX, Bankruptcy
Bankruptcy Lawyers Say FTX Was Operated By ‘Inexperienced And Unsophisticated Individuals’
On Tuesday, the attorneys representing FTX told the court that a “substantial amount of assets have either been stolen or are missing” and further stressed to the bankruptcy court that FTX executives left the lawyers James Bromley and Sullivan Cromwell with limited information. Bromley further likened the former FTX CEO Sam Bankman-Fried’s (SBF) crypto empire to his “personal fiefdom” and in the end, the attorney said, “the emperor had no clothes.”
Bankruptcy Lawyers Outline FTX’s Financial Issues, Lawyer Says Case Is One of the Most ‘Difficult Collapses in the History of Corporate America’
The Delaware bankruptcy court heard from FTX lawyers James Bromley and Sullivan Cromwell on Tuesday, and it seems FTX’s financial records do not look good. According to court documents, FTX has a cash balance of around $1.2 billion and this weekend a list of FTX’s 50 top creditors show the entities are owed roughly $3.1 billion.
However, the list of the creditors, at least for right now, remains confidential and names are redacted. According to a report from the New York Times (NYT), roughly 500 individuals logged into the court’s Zoom broadcast on Tuesday. At the hearing, Bromley told the court that a “substantial amount of assets have either been stolen or are missing” from the FTX platform.
The attorney remarked that lawyers understand “many people that are looking to get their money back immediately,” and Bromley insists the team is “working towards being able to do that.” The attorneys had a lot of descriptions for FTX and Alameda Research executives, and Bromley called SBF’s empire his “personal fiefdom” that ended by showing the “emperor had no clothes.”
Restructuring executives and lawyers are looking to “bring order to disorder,” Bromley noted. FTX executives were also called “inexperienced” and “unsophisticated individuals.” Bromley’s statements echoed the commentary written by FTX’s new CEO, John Ray, who said the FTX bankruptcy was worse than Enron’s.
Bromley also told the court that FTX suffered from “cyberattacks” referring to when FTX’s wallets were hacked the day the company filed for bankruptcy protection. Bromley further mentioned that FTX’s headquarters moved around a lot in regions like Berkeley, California, Hong Kong, the Bahamas, and Miami.
However, despite the constant moving, FTX was “effectively under the control of Mr. Bankman,” Bromley detailed. FTX lawyers also detailed that the Bahamas-based joint provisional liquidators have agreed to transfer the case to the district of Delaware. Overall, Bromley said the FTX bankruptcy case represented “one of the most abrupt and difficult collapses in the history of corporate America.”
Tags in this story
alameda, Alameda Research, assets stolen or are missing, attorney, bahamas, Bankruptcy, Bankruptcy Case, Bankruptcy Creditors, Berkeley, california, collapse, corporate America, Court Filings, filings, FTX Bankruptcy case, FTX collapse, Hong Kong, James Bromley, John Ray, lawyer, miami, New FTX CEO, Sam Bankman-Fried, sbf, Sullivan Cromwell
What do you think about the FTX bankruptcy case and the lawyer’s statements? Let us know what you think about this subject in the comments section below.
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
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Bahamas watchdog ordered FTX to send digital assets to its wallet
Bahamas watchdog ordered FTX to send digital assets to its wallet Oluwapelumi Adejumo · 7 seconds ago · 2 min read
The regulator said the move was aimed at “safekeeping” the assets and “was necessary to protect the interests of clients and creditors” of the bankrupt exchange.
2 min read
Updated: November 18, 2022 at 9:27 am
Cover art/illustration via CryptoSlate
The Securities Commission of Bahamas revealed on Nov. 18 that it directed FTX to transfer digital assets under its control to the Commission’s wallet on Nov. 12.
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
According to the regulator, the directive was aimed at “safekeeping” the assets and “was necessary to protect the interests of clients and creditors” of the bankrupt exchange.
FTX court filing reveals the firm sent assets to Bahamas authorities
A Nov. 17 court filing from FTX revealed that it has recorded and verified text evidence that the Bahamas regulators directed the unauthorized access and withdrawal from the bankrupt exchange.
According to the filing, former CEO Sam Bankman-Fried and CTO Gary Wang were behind the Nov. 13 events. The exchange said the assets were “custodied on FireBlocks under control of Bahamian gov’t.”
“The Debtors thus have credible evidence that the Bahamian government is responsible for directing unauthorized access to the Debtors’ systems for the purpose of obtaining digital assets of the Debtors—that took place after the commencement of these cases.”
FTX also challenged the complaint filed by the Bahamas-government appointed liquidators in New York. The liquidators had filed a Chapter 15 in a New York court requesting the court to grant it control of the proceedings in the Bahamas.
According to FTX, the Chapter 15 filing should be transferred from the New York court to Delaware to avoid “potentially inconsistent opinions, duplication of efforts, and unnecessary expense.”
FTX also argued that the Bahamas-appointed liquidators did not mention its intention to file a Chapter 15 case in a new court in the United States.
The Bahamas regulator had earlier said it did not instruct FTX to prioritize the withdrawal of Bahamian assets.
Reports had revealed that the FTX hacker was the 35th-largest holder of Ethereum. The hacker’s address holds a total of 228,523 ETH worth $284.82 million. The hacker had also been swapping and moving tokens since the beginning of this week.
Posted In: FTX, Bankruptcy
FTX investigation might lead to SBF being extradited to the United States
American authorities are trying to extradite Sam Bankman-Fried aka SBF to investigate the debacle surrounding the bankrupt FTX. According to Bloomberg, they have been in talks with the Bahamian authorities to bring back SBF to the U.S for questioning.
The report went on to claim that SBF is cooperating with local agencies at the moment.
While efforts to extradite SBF to the United States have been underway for over a week, these efforts gained steam after a hack followed the exchange filing for bankruptcy.
SBF currently under Bahamian supervision
FTX filed for bankruptcy on 11 November. The filing included FTX.US, Alameda Research, and around 130 other companies under the group. The same day, the Securities Commission of Bahamas froze FTX Digital Markets’ assets, besides suspending its registration.
Since then, the online space has been afloat with rumours.
Right now, SBF, along with Co-founder Gary Wang and Director of Engineering Nishad Singh, is under the supervision of local agencies.
Here, it’s worth noting that previously, there were speculations that SBF has been trying to flee or had already fled to Argentina. However, he later confirmed to Reuters that he was still in The Bahamas, denying allegations of fleeing.
Multiple investigations underway
Regulatory bodies in the U.S began investigating FTX once the news of its collapse emerged last week.
According to a Bloomberg, the Securities and Exchange Commission (SEC) is investigating FTX.com, FTX.US and Alameda Research, besides investigating SBF for potentially violating securities rules. As per another report from around the same time, the Department of Justice is also investigating FTX alongside the SEC.
Besides these federal agencies, the Department of Financial Protection and Innovation (DFPI), the financial regulatory body of the state of California, is also investigating the failure of the FTX platform. In fact, California became the first state in the U.S to launch an enquiry into the bankrupt cryptocurrency exchange.
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