Bahamas Securities Regulator Blasts 'Inaccurate' Accusations Made by FTX

The Securities Commission of The Bahamas said FTX misrepresented the regulator's move to secure the embattled exchange's assets against hacks in bankruptcy court filings in the U.S.

AccessTimeIconNov 24, 2022 at 9:03 a.m. UTC
Updated Nov 28, 2022 at 5:24 p.m. UTC

The Securities Commission of The Bahamas is firing back at collapsed crypto exchange FTX's accusations that the country had directed unauthorized access to transfer assets off the platform after FTX filed for bankruptcy protection in the U.S.

In a Wednesday notice, the regulator called the allegations "intemperate and inaccurate," and said it had sought the order from the country's Supreme Court to protect the embattled exchange's digital assets against "the risks associated with hacking and compromise."

Sam Bankman-Fried's collapsed crypto enterprise, under new leadership, has kicked off insolvency proceedings in the U.S. Bankruptcy Court for the District of Delaware. Shortly after the company filed for chapter 11 bankruptcy on Nov. 11, court-appointed liquidators in the Bahamas filed another chapter 15 suit for cross-border insolvency proceedings in a New York court.

FTX, in a consequent court filing, asked the court to allow the chapter 15 filing to be transferred to Delaware so that all proceedings could take place in one venue. In the same filing, FTX accused the Bahamian government of directing unauthorized access to FTX's systems in order to withdraw assets after the firm had filed for bankruptcy.

The Securities Commission announced afterwards that it had ordered the contents of FTX's crypto wallets to be transferred to government-controlled wallets for safekeeping.

On Tuesday, during the first court hearing for the chapter 11 proceedings, FTX's lawyers said they had reached an agreement with the Bahamian liquidators to transfer their New York case to Delaware. While announcing the agreement, James Bromley, a partner in Sullivan & Cromwell’s Finance and Restructuring Group, said FTX had evidence showing that "there have been movement of assets out of the debtors' estates to the Bahamas."

The Commission's statement comes after the hearing, and said it was "concerning" that FTX "chose to rely on the statements of individuals they have (in other filings) characterized as unreliable sources of information and potentially 'seriously compromised.'”

Statements made by other FTX officials about the exchange suffering "significant thefts" and reports that their systems were compromised "reinforces the wisdom of the Commission’s prompt action to secure these digital assets."


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Sandali Handagama

Sandali Handagama is CoinDesk's deputy managing editor for policy and regulations, EMEA. She does not own any crypto.