FTX Leadership Misrepresented Bahamas Authorities’ Actions, Says AG

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Fol­low­ing Sam Bankman-Frieds’ speedy exit, author­i­ties in the Bahamas began inves­ti­gat­ing the col­lapse of the col­lapsed cryp­to exchange.

One mea­sure tak­en was to freeze the assets of FTX Dig­i­tal Mar­kets – the Bahami­an sub­sidiary of the company.

Speculation Not Welcome

In an address to the nation con­duct­ed via Face­book Live, Bahamas Attor­ney Gen­er­al and Min­is­ter of Legal Affairs Ryan Pin­der praised the swift actions tak­en by the local reg­u­la­tors. He also cau­tioned would-be crit­ics that the sit­u­a­tion is not as sim­ple as it seems and blam­ing Bahamas reg­u­la­tors for the melt­down would be a gross over­sim­pli­fi­ca­tion of the matter.

“Any attempt to lay the entire­ty of this deba­cle at the feet of the Bahamas because FTX is head­quar­tered here would be a gross over­sim­pli­fi­ca­tion of real­i­ty. It is deeply mis­guid­ed to con­clude that reluc­tance to com­mu­ni­cate the details of an active inves­ti­ga­tion means that noth­ing is happening.”

Timely Freeze of All Possible Assets

The Bahamas, whose GDP is large­ly made up of the coun­tries’ strong off-shore bank­ing sec­tor, used its author­i­ties’ expe­ri­ence in sim­i­lar mat­ters and imme­di­ate­ly froze all pos­si­ble assets of both FTX and FTX Dig­i­tal Markets.

Accord­ing to Pin­der, the unique cir­cum­stances sur­round­ing the melt­down pushed the author­i­ties to skip the pro­vi­sion­al liq­ui­da­tion step and take cus­tody of the assets direct­ly in order to ensure cred­i­tors and cus­tomers get as much of their mon­ey back as possible.

In response, FTX stat­ed it had “cred­i­ble evi­dence” that the Bahami­an gov­ern­ment is respon­si­ble for direct­ing “unau­tho­rized access” to their accounts in order to obtain the dig­i­tal assets.

Nat­u­ral­ly, this begs the ques­tion of why such a seizure would be nec­es­sary in the first place, which FTX is unlike­ly to answer.

Nev­er­the­less, con­sid­er­ing the words of FTX’s new CEO, John Ray III – who decried the lack of cor­po­rate over­sight and due dili­gence regard­ing the firm’s assets – the mea­sures tak­en by Bahami­an author­i­ties are pru­dent, to say the least.

There is also the mat­ter of Kraken’s coop­er­a­tion with the U.S. author­i­ties. Fol­low­ing talks with reg­u­la­tors, the vet­er­an exchange also froze accounts belong­ing to FTX and Alame­da, along with wal­lets oper­at­ed by the exec­u­tives of the two firms.

For now, it is unclear how and when Bahami­an author­i­ties plan to reim­burse FTX cred­i­tors. The resti­tu­tion process will like­ly depend in part on the deci­sion of U.S. author­i­ties, who will begin hold­ing hear­ings on FTX’s con­duct shortly.

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