The Securities and Exchange Commission (SEC) in the Bahamas which is responsible for regulating exchanges and protecting investors says it will be keeping the digital assets belonging to the insolvent FTX before delivery to its customers and creditors.
A news report from Reuters stated that the assets worth $3.5 billion were transferred to digital wallets that can only be accessed by the Bahamian regulators shortly after the firm filed for bankruptcy protection in the United States. It is worth noting that the digital assets were meant to be in the possession of the regulators on a temporary basis.
The report highlighted that Sam Bankman-Fried, the embattled former CEO of the bankrupt FTX exchange, and his executives no longer have access to these digital assets after the transfer to the Bahamas regulators.
Meanwhile, FTX bankruptcy lawyers have said they do not trust the Bahamian government with information that may be used to steal assets from the insolvent firm. The lawyers stated this while fighting a request for internal records from an insolvent affiliate based in the Bahamas.
FTX’s attorneys further claimed that the Bahamian regulators conspired with Bankman-Fried to thwart the United States bankruptcy proceedings and remove assets to the prejudice of some creditors.
Sam Bankman-Fried’s Trial
Sam Bankman Fried has been released on a $250 bail bond after being detained in the Bahamas. The disgraced CEO faces six conspiracy charges, including conspiracy to launder money and violate campaign finance laws and two counts of wire fraud.
Bankman-Fried will live at his parents’ home in Palo Alto, California, according to bail conditions. He is also not allowed to start any other business without getting permission from the government.
Caroline Ellison and Gary Wang, Two former executives of the defunct FTX exchange have also admitted to having conspired with Bankman-Fried to transfer funds from the FTX platform to its subsidiary firm, Alameda Research LLC.
The defunct FTX platform had previously filed a request in court to sell off part of its businesses amid its financial woes. This was before Bankman-Fried was tried in court following allegations of a fraud case.
In related news, the United States Department of Justice (DOJ) has reported having initiated an inquiry into the FTX hack. A hacker attacked the bankrupt exchange and stole crypto assets worth $372 million from the exchange shortly after the firm filed for bankruptcy.
