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Securities Commission of the Bahamas defends transfer of FTX assets

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The Securities Commission of the Bahamas has defended its decision to transfer all digital assets of FTX into digital wallets under the exclusive control of the Commission for the benefit of clients and creditors of FDM.

The Commission says the move came after it decided on 10 November that customers and creditors of FDM were in need of the protection of the DARE Act, and suspended FDM’s license to conduct business and subsequently filed a petition before the Bahamian Supreme Court to place FDM into provisional liquidation. This action – the first commenced globally against an FTX entity – placed FDM under the control of a court-appointed fiduciary and removed prior management from exercising any authority over FDM.

However, given the nature of digital assets, and the risks associated with hacking and compromise, the Commission determined that customers and creditors of FDM required further protection than the business being placed into liquidation and sought an additional Order from the Supreme Court of The Bahamas on 12 November, for authority under the DARE Act to take control of FTX assets.

In a statement the Commission writes: “It is unfortunate that in Chapter 11 filings, the new CEO of FTX Trading Ltd misrepresented this timely action through the intemperate and inaccurate allegations lodged in the Transfer Motion. It is also concerning that the Chapter 11 debtors chose to rely on the statements of individuals they have (in other filings) characterised as unreliable sources of information and potentially ‘seriously compromised’.

“Further, the statements made by the purported officers of FTX Trading Ltd. and the other purported Chapter 11 debtors – that they have suffered significant thefts, that their systems were compromised, and that they continue to face new hacking attempts – reinforces the wisdom of the Commission’s prompt action to secure these digital assets.

“The Commission will continue to evaluate the situation, continue to act in accordance with directions issued by the Supreme Court of The Bahamas, collaborate with other supervisory authorities and take such further actions as needed to preserve the assets of FDM and to safeguard the interests of customers and creditors of FDM.

“In addition, the Commission will continue to investigate the facts and circumstances regarding FTX’s liquidity crisis and any potential violations of Bahamian law and hold any responsible companies and individuals accountable, in cooperation with other regulatory agencies and law enforcement both in The Bahamas and in other affected countries in connection with their own investigations. The Commission also looks forward to continuing to cooperate with the authorities in other jurisdictions to ensure the cooperative and vigorous resolution of all necessary proceedings to effectuate those ends”

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