Bahamas Regulators Target FTX, Begin Investigation on Potential Criminal Misconduct

UTC by Ibukun Ogundare · 3 min read
Bahamas Regulators Target FTX, Begin Investigation on Potential Criminal Misconduct
Photo: Unsplash

It appears that the friendship between the Bahamas and FTX is gradually coming to an end with the ongoing scrutiny.

Following its collapse, the latest happening to FTX is the scrutiny it is facing from regulators in its home country – the Bahamas. The Securities Commission of the Bahamas issued an order to freeze the exchange’s assets last week amid its distress. The Commission wrote that the assets freeze involves FTX Digital Markets and associated parties. In addition, the agency asked the Supreme Court of the Bahamas for a liquidator of the exchange. FTX’s current situation has attracted the attention of regulators in different countries looking into how the exchange manages customers’ funds.

As the Securities Commission in the Bahamas froze all assets belonging to FTX, the local police have also leaned into the matter. The Royal Bahamas Police Force (RBPF) revealed that the Financial Crimes Investigation Branch had applied financial investigators to look into the crypto exchange. The police added that the investigative team would work with the Bahamas Securities Commission during the course of the investigation to determine if there were any criminal misconducts.

Bahamas Regulators Investigate FTX

It appears that the friendship between the Bahamas and FTX is gradually coming to an end with the ongoing scrutiny. The exchange moved its headquarters from Hong Kong to the Bahamas in September last year. The Caribbean country was one of the first countries in the world to roll out its central bank digital currency in 2020. As a crypto-friendly country, it is no surprise that FTX also transferred its headquarters there.

Furthermore, the Securities Commission has countered FTX, which claimed that it reported withdrawal in Bahama based on its regulator’s request. The exchange announced on Thursday that the Bahaman authorities have authorized it to “facilitate withdrawals of Bahamian funds.”

However, the Securities Commission wrote in a statement to address the withdrawals:

“The Commission wishes to advise that it has not directed, authorized, or suggested to FTX Digital Markets Ltd. the prioritization of withdrawals for Bahamian clients. The Commission further noted that such transactions may be characterized as voidable preferences under the insolvency regime and consequently result in clawing back funds from Bahamian customers. In any event, the Commission does not condone the preferential treatment of any investor or clients of FTX Digital Markets Ltd. or otherwise.”

FTX users, within and outside the Bahamas, were able to withdraw about $7 million worth of crypto within hours, even after the halt. After struggling to stay solvent, the exchange eventually filed for bankruptcy protection in the US. Also, the company’s CEO, Sam Bankman-Fried, resigned from his position. Currently, John J Ray III is the new chief executive at FTX, while SBF helps with a smooth power shift.

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Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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