29 January 2023

Bahamas Regulator Disputes FTX’s Claim About Value of Seized Cryptocurrencies

Bahamas Regulator Disputes FTX's Claim About Value of Seized Cryptocurrencies

The Securities Commission of the Bahamas has disputed FTX’s claim that the value of the cryptocurrencies it seized from the bankrupt crypto exchange was not $3.5 billion. The new FTX chief’s “continued lack of diligence when making public statements concerning the Commission is disappointing,” the Bahamian regulator stressed.

Bahamas Regulator and FTX Disagree on the Value of Seized Crypto Assets

The Securities Commission of the Bahamas issued a statement Monday to “correct material misstatements” made by the new FTX CEO, John J. Ray III, regarding the value of the cryptocurrencies it seized from FTX. Ray represents U.S. FTX debtors in the crypto exchange’s bankruptcy filing (Chapter 11 Debtors).

The Bahamian regulator explained that on Dec. 30, 2022, FTX and Ray “publicly challenged the Commission’s calculations” of the value of the crypto assets transferred to its digital wallets on Nov. 12. According to the Commission, over $3.5 billion in cryptocurrencies were seized from FTX. However, Ray argued that the value of the digital assets transferred on that date was actually about $296 million.

In its Monday statement, the Commission said that the U.S. FTX debtors’ calculations “were based on incomplete information,” asserting:

The Chapter 11 Debtors chose not to utilize their ability to request information from the joint provisional liquidators pursuant to a court order of the Supreme Court of the Bahamas… The U.S. debtors’ continued lack of diligence when making public statements concerning the Commission is disappointing.

The Bahamas regulator alleged that the new FTX CEO made false statements regarding the Commission in a court filing on Dec. 12, 2022, “without evidence,” and again under oath on Dec. 13 before the U.S. House Committee on Financial Services. The regulator specifically mentioned the accusation that it asked former FTX CEO Sam Bankman-Fried (SBF) to mint “a substantial amount of new tokens” during the crypto exchange’s bankruptcy process.

The Commission added:

Mr. Ray has not once reached out to the Commission to discuss any of his concerns before airing them publicly.

Ray was appointed the new FTX CEO and its chief restructuring officer when Bankman-Fried stepped down as the crypto exchange filed for bankruptcy. Ray, who also led Enron during the energy giant’s bankruptcy, said about FTX in November: “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”

The Securities Commission of the Bahamas further revealed that the new FTX CEO has not responded to its Dec. 7 letter in which the Bahamian regulator offered “cooperation with Chapter 11 Debtors.”

Do you believe the Securities Commission of the Bahamas or the new FTX management regarding the value of seized cryptocurrencies? Let us know in the comments section below.

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