Bahamas Securities Commission has $3.5B of FTX digital assets in custody

The Securities Commission of The Bahamas took control of FTX digital assets valued at more than $3.5B as of Nov. 12 because it "determined that there was a significant risk of imminent dissipation" if they stayed under FTX's control, the commission said late Thursday. That seizure of assets occurred a day after the cryptocurrency exchange filed for Chapter 11 bankruptcy proceedings in the U.S. The commission made the decision based on information that Sam Bankman-Fried, its co-founder and former CEO, provided concerning cyberattacks that took place on the systems at FTX Digital Markets, the company's registered name in the Bahamas. The commission had obtained the assets under a court order and transferred them to "secure digital wallets under the exclusive control of the commission," it said. The digital assets are being held on a temporary basis until The Bahamas Supreme Court directs the commission to transfer them to FTX customers and creditor or to the joint provisional liquidators. The commission also said it didn't "direct, authorize or suggest to FTXDM the prioritization of withdrawals for Bahamian clients. "Such transactions may be characterized as voidable preferences under the insolvency regime and consequently result in clawing back funds from Bahamian customers," it said. When the commission sought guidance from the Supreme Court on whether it could provide information regarding the digital assets under its control can be provided to U.S. debtor representatives, the court told the commission that it may only provide provide assistance to domestic or regulatory authorities. The joint provisional liquidators, however, may cooperate with and provide information to the U.S. debtors "by sharing with their representatives, in a highly confidential manner, certain information respecting the digital assets," the court said. The Bahamian Securities Commission is also continuing its investigation into the causes of FTX's failure, following the Supreme Court of The Bahamas' direction, collaborate with other authorities, and take further actions to preserve FTXDM assets, it said. The BSC investigation is separate from the U.S. Department of Justice's probe into an alleged cybercrime that transferred at least $372M out of FTX in that hours after the company had filed for Chapter 11 bankruptcy, Bloomberg reported earlier this week. Bankman-Fried is expected to enter his plea to criminal charges of fraud and misuse of customer funds next week. Earlier in the month, FTX's overseers said they have identified more than $1B in assets but are struggling to unwind the firm due to its poor records and bookkeeping .