Bahamas Regulator Takes Action to Seize FTX’s Cryptocurrencies to ‘Protect’ Clients and Creditors

The Securities Commission of the Bahamas has ordered crypto exchange FTX to transfer its cryptocurrencies to a wallet controlled by the regulator. The “Urgent interim regulatory action was necessary to protect the interests” of FTX’s clients and creditors, said the regulator.

The Securities Commission of the Bahamas (SCB) announced Thursday that it has taken “the action of directing the transfer of all digital assets of FTX Digital Markets Ltd. (FDM) to a digital wallet controlled by the Commission, for safekeeping.” FTX Digital Markets is the Bahamian subsidiary of Sam Bankman-Fried’s FTX Trading Ltd., which owns and operates the crypto trading platform FTX.com.

The securities regulator noted that the agency is “acting under the authority of an order made by the Supreme Court of the Bahamas,” elaborating:

Urgent interim regulatory action was necessary to protect the interests of clients and creditors of FDM.

The regulator further detailed: “Under the Digital Assets and Registered Exchanges Act, 2020 (DARE Act), the Commission has the authority to apply for a judicial order to protect the interests of clients or customers of a registrant of the Commission under the DARE Act.”

The announcement continues:

Over the coming days and weeks, the Commission will engage with other regulators and authorities, in multiple jurisdictions, to address matters affecting the creditors, clients and stakeholders of FDM globally to obtain the best possible outcome.

The Securities Commission of the Bahamas took action to freeze the assets of FTX Digital Markets and related parties on Nov. 10 as troubles at the crypto exchange unfolded.

The regulator also applied to the Supreme Court to appoint Brian Simms as a court-supervised provisional liquidator. In addition, Kevin Cambridge and Peter Greaves of Pricewaterhousecoopers (PwC) have been approved by the court as joint provisional liquidators.

What do you think about the Securities Commission of the Bahamas ordering FTX to transfer digital assets to a wallet it controls for “safekeeping”? Let us know in the comments section below.