Bahamas Securities Regulator Says It Didn't Order FTX to Reopen Local Withdrawals

FTX said last week it had allowed Bahamas-based customers to withdraw funds at its regulators' request.

AccessTimeIconNov 13, 2022 at 3:46 a.m. UTC

Crypto exchange FTX was not required to allow Bahamas-based customers to withdraw their funds, a local financial regulator said Saturday.

The Securities Commission of the Bahamas (SCB) published a statement on Twitter Saturday suggesting that a recent tweet by FTX admitting that Bahamian users were able to withdraw funds at the regulator's urging was inaccurate.

FTX said in a tweet "per our Bahamian HQ's regulation and regulators, we have begun to facilitate withdrawals of Bahamian funds" on Thursday.

SCB said it had not "directed, authorized or suggested to FTX Digital Markets" that it prioritize withdrawals for Bahamian users in its statement Saturday.

"The Commission further notes that such transactions may be characterized as voidable preferences under the insolvency regime and consequently result in clawing back funds from Bahamian customers," it said. "In any event, the Commission does not condone the preferential treatment of any investor or client of FTX Digital Markets Ltd. or otherwise."

SCB froze FTX's assets in the Bahamas late Thursday, but the exchange had already halted withdrawals a few days before.

Despite this halt, some users were able to withdraw nearly $7 million worth of various cryptocurrencies within a few hours on Thursday morning, data from Nansen showed.

A number of FTX users based outside of the Bahamas also appeared to try and withdraw funds with the help of local users, CNBC reported. The foreign users bought high-valued NFTs from Bahamas-based users, presumably with an agreement that the Bahamas-based users would be able to withdraw and keep some amount of the locked-up funds.

FTX declared bankruptcy on Friday, days after a deal for Binance to acquire the exchange fell through.

Adding to the exchange's chaos, it was apparently hacked for $600 million late Friday, though FTX later reported it was able to divert some of its funds back to cold storage wallets.

The exchange's new CEO, John Ray III, said the company was working with law enforcement.


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Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.