Tensions between Bahamas regulator and new FTX management

Source: Adobe

While the eyes are turned to Sam Bankman-Fried and the legal proceedings currently underway against him, other elements of this case may delay its resolution, particularly the dispute between the current officials of FTX and the regulator of the Bahamas. Statement from FTX and its new CEO, John Ray IIIbrought by the Bahamas Securities Commission (Bahamian Securities CommissionSCB) to issue a press release in which the regulator denies most of the information provided in the press and in court documents.

One of the main points of contention between the current management of FTX and the regulator is the situation of the latter’s custodial assets. The statement released on January 3 shows that US debtors, represented by John Ray III, had publicly disputed the Commission’s calculations regarding digital assets transferred to wallets under the regulator’s control: on December 30, 2022, FTX had delivered questioned SCB’s claims that it had $3.5 billion in assets. According to FTX, at the time of the seizure, these assets were worth only 296 million dollars. SCB emphasized that these declarations were made on the basis of incomplete information, reflecting the lack of due diligence on the part of the debtors.

In addition, the US debtors allegedly suggested that assets controlled by the Commission were stolen, without providing substantial evidence to support this statement. Ownership of these assets remains one of the disputed issues in the case, as FTX and its debtors are seeking to have these assets transferred to them. SCB seems to agree with FTX General Counsel Ryne Miller, however, and echoed one of his statements, which was that as long as the assets were safe, this matter would be resolved in due course.

SCB criticizes FTX’s lack of efforts to share information

Another point raised by SCB concerns an alleged request from the regulator to Sam Bankman-Fried. According to John Ray III, the regulator has asked Bankman-Fried to produce millions of dollars worth of new FTT tokens. This information was revealed during a deposition under oath before the Financial Services Committee of the United States House of Representatives. SCB claimed that these statements were baseless and contributed to creating a climate of distrust in public institutions in the Bahamas.

SCB also noted that Mr. Ray had not bothered to establish a dialogue with his officials before releasing his information to the public. The Commission is also concerned that its investigation is being undermined by the debtors’ refusal to allow court-supervised provisional joint liquidators access to FTX’s AWS system. The regulator concluded by saying that going forward, it hopes the debtors will proceed in good faith and in the best interests of FTX’s customers and creditors.

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