Bahamas regulatory authorities, the Securities Commission of the Bahamas (SCB), on Thursday, 10th November, froze all assets of the popular crypto exchange company, FTX, and related teams. The seizure followed an official license registration suspension of the exchange company, disallowing FTX to continue any crypto operations or services in the country for a time.
The SCB said in a statement that they are well aware of the public declarations claiming that FTX mishandled and transferred multiple client assets to Alameda Research. They assured the public that if those claims were valid, they would be against the official governing regulations and illegal without client authorization.
Leaked Balance Sheet Yields Suspicions of Illegal Trade Funds
Alameda Research is a renowned trading firm developed by FTX CEO Sam Bankman-Fried. The rumors of unlawful use of client assets followed a leak from the firm displaying a balance sheet that held significant amounts of FTX exchange native tokens.
The leaked balance sheet sparked rumors which spread like wildfire, claiming that FTX has been illegally funding trades using FTX users’ assets. Consequently, after the rumors rapidly reached the public, clients started withdrawing all their assets from the exchange company, causing FTX’s current liquidity crisis.
The SCB has taken all operating powers from the directors of FTX and has declared its determination to investigate the situation. The regulatory authorities have also said the most crucial course of action to take now would be to put the exchange firm into a provisional liquidation process to protect all assets and stabilize the exchange firm.
According to reports, the Bahamas Supreme Court has officially assigned a provisional liquidator to the FTX case. The court had stated previously that without written consent from the provisional liquidator, no assets of FDM, trust assets, or client assets held by FDM might be transported, allocated, or used in any other way.
Currently, FTX has its main office in the Bahamas, and its Bahamian subsidiary is the renowned FTX Digital Markets; however, FTX US is a different company having its bureau in the United States. The SCB had said in a statement that they would be working alongside the newly assigned provisional liquidator to obtain the best results, which will benefit both consumers and FTX stakeholders.
FTX Turmoil Attracts Scrutiny of the Crypto Industry
The liquidation crisis with FTX has attracted intense examinations and observations from regulatory authorities in the United States. Currently, the House of Representatives Financial Services Committee head, Maxine waters, has used the ongoing crisis with FTX as an incentive to push for more consumer protection regulations and supervision of cryptocurrency trading platforms in the country.
White House Press Secretary Karine Jean-Pierre mentioned the liquidity crisis at FTX as evidence of why proper crypto regulations and policies are essential. According to the White House, U.S. President Joe Biden has also been made aware of the current situation in the cryptocurrency market.