It has been officially confirmed by the authorities in the Bahamas that they have seized crypto funds of over $3 Billion from collapsed FTX.

Currently, these crypto funds have been kept in safe wallets of the seizing authority as a temporary arrangement for purposes of ‘safekeeping’.

SCB Seizes Over $3 Billion Funds of FTX

It was first reported in the press that FTX’s crypto funds were seized by an authority in the Bahamas that was probing the collapsed FTX.

It was later reiterated by the Securities Commission of the Bahamas (SCB) officially that the crypto funds had been seized by SCB.

SCB informed that it has seized crypto funds worth about $3.5 Billion from FTX under specifications passed in a Court order.

It further informed that after seizing the funds, SCB again went into the Court for obtaining the necessary order for the transfer of funds.

The Court was pleased to pass necessary directions through which SCB was authorized to transfer the seized funds into safe wallets.

What Is FTX Digital Markets Ltd.?

It was revealed that funds were seized from “FTX Digital Markets Ltd. (FTXDM)”, a local subsidiary of FTX Trading Ltd.

In turn, FTX Trading Ltd. is owned, controlled, and managed by parent company FTX.com, which has collapsed recently. It is this parent company “FTX.com” because of which huge turmoil is continuing in the digital asset industry.

Furthermore, FTX is being investigated along with its CEO, Sam Bankman-Fried, in various countries for allegations of fraud, embezzlement of funds, etc.

$3.5 Billion is now in the Official Custody of SCB

SCB informed on 12th November 2022 in writing that it has seized of funds in cryptocurrencies belonging to FTXDM. However, the funds have been moved into the wallets of SCB for safekeeping through orders of the Court.

SCB further informed that the crypto funds were valued at their market price prevailing at the time which comes to $3.5 Billion.

SCB exercised its power under the Supreme Court’s directives which ordered for seizing/moving of funds into SCB’s custody until disposal of the case.

SCB also denied the rumor that while moving the funds, no new digital tokens were required to be created.

Temporary Safekeeping

It has been clarified by the Bahama’s regulator that the funds have been moved into safe wallets as an interim arrangement. The arrangement is temporary until the final decision by the Supreme Court in the ongoing litigation.

SCB informed that if Court directs that the funds be distributed amongst FTX’s customers, then the Court orders would be implemented.

This distribution shall be done in accordance with the law through the Court appointed liquidators under the strict supervision of the Court.

Sealing Order against FTX

According to SCB seizure of funds was done strictly in light of the sealing order that SCB had submitted to the Court for approval.

It was after the sealing order’s approval by the Court that the action of seizure of funds was taken.

SCB specifically denied allegations that the seizure was solely based on SEC’s decision and no permission from the Court was sought.

The regulator also refuted the allegations that SCB never directed FTX to suspend withdrawals of its customers based in the Bahamas.

It informed that the decision of suspending withdrawals was taken by FTXDM itself and that SCB had nothing to do with it.

It may be noted that FTX’s founder and CEO, Sam Bankman-Fried, is also under judicial lockup in Bahama and facing a trial.

So far, the US court has approved several rulings against SBF for his involvement pertaining to making huge investments.

The US court has even issued an order for SBF not to invest even more than $1,000 without the court’s approval.

Despite the orders, SBF has done as he pleased, making the investors and the creditors very unhappy. As a result, even more, detailed investigations have been launched by the court against SBF.