The Bahamas’ securities regulator has seized $3.5bn (£2.9bn) worth of cryptocurrency “for safekeeping” from Sam Bankman-Fried’s collapsed FTX exchange.
The transfer took place after more than $370m in digital assets were reportedly stolen from the exchange in an apparent cyber attack.
Although the Securities Commission of the Bahamas (SBC) has said it took control of some of FTX’s assets following the cryptocurrency exchange’s implosion, it has not disclosed the amount before now.
The seizure could trigger a fresh fight with US-based courts and liquidators over FTX’s remaining assets.
“Based on information provided by Sam Bankman-Fried to the Commission concerning the cyberattacks that took place on the systems… the Commission determined that there was a significant risk of imminent dissipation as to the digital assets,” said the SCB on Thursday.
US-based bankruptcy lawyers acting for FTX have said they “do not trust” the Bahamas government, telling American courts earlier this month they suspect the archipelago nation’s officials might syphon off digital assets.
Those assets, cryptocurrency tokens that were bought and sold by FTX’s customers, rightly belong to FTX and its creditors according to the company’s lawyers.
The digital tokens are being held on a “temporary basis” until the country’s supreme court orders it to hand them over to creditors or FTX’s liquidators, the SBC added.
Christina Rolle, director of the SBC, told a local court she alerted the Bahamas’ police chief to “the potential for criminal activity” on 9 November, two days before FTX entered bankruptcy.
“For the avoidance of doubt, at no time has the Commission colluded with any principal, officer or director” of FTX, she added.
“All transferred assets were and remain under the sole control of the Commission.”
Cryptocurrency observers had noticed several erratic transactions linked to FTX in the hours after the exchange crashed into bankruptcy.
As well as the Bahamas seizure, unknown hackers are thought to have made off with around $477m worth of cryptocurrencies as the exchange fell apart.
Sam Bankman-Fried, FTX’s founder, is expected to enter a plea next week to criminal charges that he defrauded investors and looted billions in customer funds,
FTX filed for bankruptcy protection on November 11. Its new chief executive, John Ray, told Congress on this that the exchange lost $8bn of customer money while being run by “grossly inexperienced, non-sophisticated individuals.”
