National

$3.5B in FTX Assets Being Held for Safekeeping

NASSAU, BAHAMAS – As investigations into the fall of FTX continues, an affidavit filed in the Supreme Court revealing the Securities Commission is holding $3.5 billion worth of digital assets retrieved from FTX Digital Markets.

Published

2 years ago

December 30, 2022

Berthony McDermott

The affidavit filed by Securities Commission Executive Director Christina Rolle also revealing the recovery came with the help of former FTX CEO Sam Bankman-Fried and Gary Wang days after the fallout of the company.

A statement from the SCB asked if information gathered by the commission may be provided to the United States debtors, given the dispute between the joint provisional liquidators and the US debtors for rights of access to the records of FTX.

To that the court entered an order saying, “The commission may only lawfully provide assistance to a domestic regulatory authority, or overseas regulatory authority.”

It added, joint provisional liquidators “may cooperate with, and provide information to, the US debtors by sharing with their representatives, in a highly confidential manner.”

FTX filed for chapter 11 bankruptcy in a US court, however, FTX Digital Markets is not a part of those proceedings.

FTX CEO John Ray III has accused the joint provisional liquidators and the SCB of working with Bankman-Fried to undermine the bankruptcy proceedings.

In the 500-page affidavit, Rolle went on the defense saying, “The commission has at all times acted in its capacity as regulator in good faith, in the public interest, in compliance with the orders of The Bahamas Supreme Court and under the supervision of the Bahamian Supreme Court and in accordance with its fiduciary duties, as confirmed by the trusteeship order.”

She also stressed that no new digital assets were issued, as alleged by the new CEO.

The SCB Executive Director also explained that the founders were instructed to transfer digital assets under the authority of the commission.

Just last week Bankman-Fried was released on a $259m bail bond package in New York City and will be brought up on fraud charges.

Meanwhile, Wang took a plea deal and is expected to give evidence against Bankman-Fried.

As for the assets, Rolle says they are protected by the commission, adding the wallet is being hosted by Fireblocks.

She added that while it didn’t cost the SCB anything to set up the wallets, there will be an annual maintenance fee of $631,200.

The affidavit added, “At no time has the commission colluded with any principal, officer or director of FTXDM, the provisional liquidator or any third party to transfer digital assets owned by or under the custody or control of FTXDM,”

Additionally, she said, joint provisional liquidators are locked out of the digital market system, preventing them from accessing records.