Bahamian Authorities Seize $3.5 Billion in FTX Funds
As the FTX saga has unfolded over the last few weeks, the question on everyone’s mind has been, where is the money? As one of the biggest crypto exchanges in the world at one point, FTX had billions of dollars under its control and owes billions to just its top 50 creditors. Even as its former CEO Sam Bankman-Fried awaits trial, this question remains.
And now, we have gotten something of a resolution. According to a December 29, 2022 statement from the Bahamian Securities Commission, $3.5 billion of the exchange’s funds have been recovered.
Where’s the Money?
According to the release, the Commission had been alerted back in November by FTX about its being targeted for cyberattacks. After investigations, the Commission determined that FTX’s funds were at risk of being stolen and obtained a court order to transfer the money in its possession to a Commission-owned wallet.
“Accordingly, on 12 November 2022, the Commission, in the exercise of its powers as regulator acting under the authority of an Order made by the Supreme Court of The Bahamas, took the action of directing the transfer of all digital assets of under the custody or control of FTXDM or its principals, valued at more than US$3.5 billion, based on market pricing at the time of transfer, to digital wallets controlled by the Commission, for safekeeping,” the statement said, noting that the transfer process did not involve the creation of any new tokens.
It is worth noting that FTX did suffer a cyber attack that saw about $700 million worth of customer funds stolen and to date, the issue has not been resolved. Given all the complications that took place during that time and accusations of mismanagement levelled at FTX, authorities felt that it was best that the funds remain in their care.
Now, what will happen to the money since several FTX executives are facing trial and the exchange has filed for bankruptcy? According to the statement by the commission, the funds will be held until a court order can be obtained to disburse them to customers.
“The digital assets transferred on 12 November 2022 to digital wallets under the exclusive control the Commission are being held by the Commission on a temporary basis, until such time as The Bahamas Supreme Court directs the Commission to deliver them to the customers and creditors who own them, or to the JPLs to be administered under rules governing the insolvency estate for the benefit of the customers and creditors of FTXDM,” the release says.
The Process of Return
Now that these funds are in the hands of the authorities, the next question on everyone’s minds is how soon they will be given to their owners. As the press release has explained, a court order will be needed to disburse the assets and even then, time will be needed to determine who out of FTX’s millions of users are entitled to the funds.