Dec 30, 2022 - Economy

Bahamas authorities seized $3.5 billion in FTX assets

The FTX Cryptocurrency Derivatives Exchange logo on a laptop screen.

The FTX Cryptocurrency Derivatives Exchange logo on a laptop screen. Photo: Andrey Rudakov/Getty Images

The securities regulator of the Bahamas announced Thursday that it seized $3.5 billion in digital assets controlled by FTX Digital Markets (FTXDM) on Nov. 12.

Why it matters: A reported million people are owed money in cryptocurrency and traditional forms from the bankrupt cryptocurrency exchange. Its remaining funds are now split between the company and the regulator that formerly oversaw it on behalf of the island nation.

What they're saying: The statement from the Securities Commission of The Bahamas first details the process it took to act under the authority of the nations courts, then it says, "The Commission ... took the action of directing the transfer of all digital assets of under the custody or control of FTXDM or its principals, valued at more than US$3.5 billion, ... to digital wallets controlled by the Commission, for safekeeping."

  • It does not detail which crypto assets were seized. Any of the more volatile assets, such as bitcoin, will have lost considerable value since Nov. 12. Stablecoins such as tether or dai would be worth much the same as they were.

Of note: The new management of FTX reported on Nov. 20 that it had access to about $1.2 billion cash, with about $3.1 billion in debts.

  • At around the same time, approximately $372 million in digital assets appear to have been stolen from FTX, which is currently under investigation by the Department of Justice.

Zoom out: Tension has broken out between the Caribbean regulatory authority and the new management of FTX.

  • Each side appears to want a major concession from the other.
  • Authorities in the Bahamas would like access to FTX's records in order to conduct its own investigation, while FTX's new management would like to take custody of the crypto assets currently stewarded by the island nation.
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