Bahamas Regulator Rejects FTX’s Request to Issue New Tokens

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Key takeaways:

  • The Bahamas regulator responds to FTX’s challenge.
  • The Bahamas Securities Commission has had to correct serious mistakes.

FTX debtors’ claims have been rejected by the Securities Commission of The Bahamas (SCB), which also expresses worry that the probe has been “impeded.”

FTX debtors’ representative John J. Ray III, who is based in the US, committed severe mistakes in press releases and court filings, according to a statement issued by the Securities Commission of The Bahamas (SCB) on January 3.

According to the statement, the Chapter 11 Debtors had “publicly questioned” the Commission’s estimations of the value of digital assets transferred to digital wallets under the Commission’s jurisdiction in November 2022.

It claimed that these assertions were supported by “incomplete” material and that the debtors failed to exercise due diligence by contacting the Joint Provisional Liquidators for information.

The statement continued by stating that FTX CEO John J. Ray III made a public declaration in court testimony before the US House of Financial Services Committee that the Commission had granted FTX authority to “mint a huge quantity of additional tokens” under “oath.”

The Chapter 11 Debtors also claimed that the digital assets held in trust for FTX consumers and creditors by the Commission were “stolen.” Still, they did not provide any evidence to support these assertions.

The refusal of the Chapter 11 Debtors to let the Court Supervised Joint Provisional Liquidators access to FTX’s AWS System has caused the Commission’s investigators to worry that the integrity of their investigation may be endangered.

The SCB is expecting that the Chapter 11 Debtors would proceed with issues in good faith and in the best interest of consumers and creditors of FTX, according to the release.

The revelation from court documents in December 2022, where FTX attorneys stated the Bahamas government apparently demanded that the former CEO of FTX, Sam Bankman-Fried (SBF), produce a new cryptocurrency controlled by local politicians, prompted the notice from the Bahamian securities commission.

Initial reports said that the Bahamas regulator had requested SBF to create new digital assets worth hundreds of millions of dollars.

The Bahamas Securities Regulator reportedly recently seized $3.5 billion in assets from bitcoin exchange FTX and planned to restore them to debtors and former customers.

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