Business

SCB to recoup costs from FTX for safeguarding digital assets

Commission will not receive money for securing assets, unless approval granted by Supreme Court

The Securities Commission of The Bahamas’ (SCB) latest statement, released late Monday night, explains the regulator’s intent to recoup any costs it incurs from operating a digital wallet holding cryptocurrency exchange FTX’s assets for safekeeping.

The SCB said it secured an order from the Supreme Court to ensure it is reimbursed through the FTX liquidation proceedings.

“On 21 November 2022, the Securities Commission of The Bahamas obtained an order from the Supreme Court of The Bahamas to secure a right of indemnity and right to be reimbursed for expenses reasonably incurred by the commission in connection with the regulatory action taken to safeguard the digital assets of FTX Digital Markets Ltd. (FDM),” the statement said.

“As previously reported, on 12 November 2022, under the authority of an order by the Supreme Court of The Bahamas, the commission determined urgent action to safeguard the digital assets of FDM for the benefit of its customers and creditors was needed, and directed the transfer of certain digital assets to a digital wallet controlled by the commission.

“The order secured today confirms the commission is entitled to be indemnified under the law and FDM shall ultimately bear the costs the commission incurs in safeguarding those assets for the benefit of FDM’s customers and creditors, in a manner similar to other normal costs of administering FDM’s assets for the benefit of its customers and creditors.”

The SCB ensured that it would not receive any money for its work in securing the digital assets, unless approval is granted by the Supreme Court.

The statement explained that the SCB, along with the court-appointed joint provisional liquidators and other “supervisory authorities globally”, are continuing to evaluate the FTX debacle that has shook the cryptocurrency world and continues to make international headlines.

“The commission is continuing to investigate the facts and circumstances regarding FTX’s liquidity crisis and its impact on the operations of FDM, a registered entity,” the statement said.

“The commission will hold accountable any companies or individuals found responsible for the violation of any laws administered by the commission.”

Almost two weeks ago, a liquidity crisis within FTX led the company to file Chapter 11 bankruptcy in the US and the SCB to freeze its assets and appoint the liquidators.

Investigations into the company have begun to find gross mismanagement of funds, the comingling of companies, a misuse of customer funds and a corporate governance structure that amounted to bedlam.

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Chester Robards

Chester Robards rejoined The Nassau Guardian in November 2017 as a senior business reporter. He has covered myriad topics and events for The Nassau Guardian. Education: Florida International University, BS in Journalism

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