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FTX Digital Assets Seized by Authorities in Bahamas

    FTX Digital Assets Seized by Authorities in Bahamas
    Last updated: 1 week ago
    Image credit: Reuters

    Facts

    • After filing for Chapter 15 bankruptcy in the US on Tuesday, the assets of FTX Digital Markets have been seized by the Securities Commission of The Bahamas. This comes after a bankruptcy court filing alleged that the crypto exchange issued unreliable financial statements, mishandled confidential data, and used corporate funds to buy homes for employees in the Bahamas. [1]
    • FTX Digital, a non-US company unit, is using Chapter 15 to shield itself from creditors seeking to file lawsuits and tie up assets in the US. Bahamian authorities say they've transferred the assets to a digital wallet under their control for "safekeeping." [2]
    • The Securities Commission also said it will consult with international authorities and regulators to ensure the "best possible outcome" for creditors, clients, and stakeholders of FTX. [1]
    • The company's court filing argues that the US should recognize the Bahama-based unit since one of its client accounts held $15K at the Holland and Knight law firm in New York. Other parties involved have three weeks to object before the court makes a determination. [3]
    • Amid its latest court filing in the Southern District of New York, FTX has also faced suspensions of their licenses in Australia and Cyprus. The company is also unauthorized to operate in the UK. [4]
    • Former FTX CEO and founder Sam Bankman-Fried this week, facing an $11B class action lawsuit from investors, said he regretted filing for bankruptcy because regulators "don’t protect customers at all," before walking back some of his statements. [2]
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    Spin

    Pro-establishment narrative

    The collapse of FTX shows just how risky it is to invest in cryptocurrency. The US government, among others, is justifiably investigating the matter, and it's key to track how the public sector will respond through legislation. Companies like FTX need to be regulated the same way traditional banks are.

    Establishment-critical narrative

    The pious calls of regulators are disingenuous. Besides the current headlines of bankruptcy, financial fraud, and risky investments, FTX's relationship with politicians and governments also needs scrutiny. The multi-billion-dollar exchange was used for everything from funding Ukraine's war effort to political campaign donations in the US. The public sector got tangled up in this crypto mess.

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