FTX Chaos Continues as SCB Freezes its Assets

Amidst FTX.com’s struggle to rescue itself from liquidity crunch, the Securities Commission of the Bahamas (SCB) has frozen the crypto exchange asset in view of the ongoing circumstances, as per a tweet.

The Securities Commission of The Bahamas took action to freeze assets of FTX Digital Markets. The Commission is aware of mishandled assets. pic.twitter.com/XyqHe4k5zj

— Marvin Thompson (@marvinjthompson) November 10, 2022

The SCB stated that FTX’s assets could no longer be moved without the approval of a Supreme Court-appointed liquidator. The item frozen was the FTX Digital Markets (FDM) coupled with the suspension of FTX’s registration in the country.

SCB asserted that it was not unaware of the allegations levelled against FTX crypto exchange over mishandling and mismanagement of clients’ assets, which was reportedly transferred to Alameda Research.

It should be noted that Alameda Research is a trading firm established by FTX CEO Sam Bankman-Fried. A leaked balance sheet statement of the trading firm revealed that it possessed a huge amount of FTX native token FTT.

Also, it was gathered that the trading firm was running trades using users’ funds, which led to a “bank-run” on FTX, thereby precipitating a liquidity crisis on FTX platform.

In view of the developments, the SCB has decided to consign FTX into a provisional liquidation while stripping powers from the directors of FTX.

The Bahamian Supreme Court further appointed a provisional liquidator, which means that no assets of FDM, client assets, or other assets relating to the company can be used or transferred without the written approval of the provisional liquidator. 

It is noteworthy that FTX headquarters is located in the Bahamas. The FTX Digital Markets is the Bahamian subsidiary of the exchange. However, there is also FTX US which operates as an independent entity in the United States.

FTX US Platform Not Spared

While the FTX US platform has been working hitch-free since the start of the shitshow, an insight report revealed that trading on the exchange may be suspended in the coming days.

Already, the FTX crisis has attracted the attention of U.S. lawmakers with the House of Representatives Financial Services Committee chair, Maxine Waters, advocating for greater consumer protection with regard to crypto trading platforms.

In the same vein, the White House Press Secretary Karine Jean-Pierre acknowledged that the FTX liquidity crisis has necessitated the importance of regulating cryptocurrencies.