FTX Crash: Bahamas Attorney General Says Crypto Exchange Still Focused On “Active” Investigation



The Bahamas Attorney General Ryan Bender said Sunday that the collapsed cryptocurrency platform FTX remains the subject of an “active and ongoing investigation” by Bahamas authorities, praising the Bahamas’ regulatory regime and the speed with which it responded to the crisis.

FTXwhich was among the largest corporations in the world Cryptocurrency Stock exchanges, headquartered in the Bahamas. The company, whose liquidity crisis forced the company to declare bankruptcy on November 11, is under investigation by Bahamas and US authorities. In mid-November, the Royal Bahamas Police said that Bahamas government investigators were looking into whether any “criminal misconduct” had occurred.

“We are in the early stages of an active and ongoing investigation,” Bender said Sunday, according to prepared remarks for the speech. “It’s a very complex investigation.” He said it involved both civil and criminal authorities.

Bender said the Bahamas Securities Commission, Financial Intelligence Unit, and Police Financial Crimes Unit “will continue to investigate the facts and circumstances surrounding the FTX crisis, and any possible violations of Bahamas law.”

Binder also defended the Bahamas’ regulatory regime and said its securities commission moved quickly “because of the strength of the legislative framework”.

Securities regulators in the Bahamas revoked FTX Digital’s license and began involuntary liquidation proceedings the day before the US bankruptcy case began.

“Any attempt to put this entire debacle at the feet of the Bahamas, because FTX is headquartered here, would be a gross simplification of reality,” Bender said, adding that the BSC moved with “remarkable” speed in response.

Sam Bankman-Fried, 30, founded FTX in 2019 and has ridden the cryptocurrency boom to a net worth that Forbes pegged a year ago at $26.5 billion (roughly Rs. 2,16,560 crores). Bankman-Fried resigned as CEO of FTX the same day the company filed for bankruptcy.

The liquidity crunch came after Bankman-Fried secretly transferred $10 billion (about Rs. 81,700 crores) of FTX clients’ funds to his trading firm owned by Alameda Research, Reuters reported, citing two people familiar with the matter.

A source familiar with the investigation told Reuters that the US Attorney’s Office in Manhattan, led by veteran securities fraud prosecutor Damien Williams, began in mid-November investigating how FTX handled client funds. The Securities and Exchange Commission and the Commodity Futures Trading Commission have also opened investigations.

FTX’s demise comes after a series of crashes that wiped out other major players including Voyager Digital and Celsius Network and prompted some global investors to question the viability of the cryptocurrency sector.

© Thomson Reuters 2022

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