Bahamas Holding $3.5 Billion Of FTX’s Cryptocurrency For ‘Safekeeping’
Michael M. Santiago via Getty Images

The government of the Bahamas seized $3.5 billion of cryptocurrency assets belonging to FTX, the defunct exchange formerly led by Sam Bankman-Fried, after the company’s collapse.

FTX filed for bankruptcy last month after users learned that the venture was intertwined with sister firm Alameda Research; both were controlled by Bankman-Fried and other amateur business leaders working from a luxury penthouse in the Bahamas. The entrepreneur was detained earlier this month by authorities in the island nation, where his companies were headquartered, and subsequently extradited to the United States.

A statement from the Securities Commission of The Bahamas confirmed that the agency “took the action of directing the transfer of all digital assets” managed by the company, amounting to $3.5 billion in cryptocurrencies, to government-controlled digital wallets “for safekeeping” as reports of potential cyberattacks began to circulate. The transfer occurred on November 12, the day after FTX filed for bankruptcy in the U.S.

The assets are still held by the agency “on a temporary basis” until the Bahamian Supreme Court determines how the assets should be distributed. An earlier statement from the Securities Commission of The Bahamas issued on November 17 had confirmed that assets owned by FTX were seized, although the specific amount was not disclosed at the time.

Current FTX CEO John Ray III, a bankruptcy attorney who is managing the distribution of remaining company assets to investors and customers, said in court documents that he had never witnessed “such a complete failure of corporate controls and such a complete absence of trustworthy financial information” in his entire career, which included managing the collapse of Enron. He told members of the House Financial Services Committee that he is mitigating “to the greatest extent possible” harm suffered by former associates of the defunct company.

Damien Williams, the United States Attorney for the Southern District of New York, indicted Bankman-Fried of conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations, according to a press release from the Justice Department. The disgraced entrepreneur could spend as much as 115 years in prison.

Bankman-Fried is presently under house arrest at his parents’ estate in northern California, which is worth $4 million and includes amenities such as a gated pool and a lawn lined by palm trees. The former financier’s $250 million bond is secured by his parents’ equity in the property.

Beyond accusations of fraud and efforts to manipulate American consumers through mass-market advertising, Bankman-Fried garnered controversy for contributing heavily to Democratic campaigns, emerging as the sixth-largest overall donor in the most recent midterm elections. He was also the second-largest donor to the Biden campaign two years ago.

The Senate Majority PAC, which fundraises for Democrats seeking election in the upper chamber, returned $3 million in combined donations made by Bankman-Fried and Nishad Singh, the director of engineering at FTX. The Democratic National Committee, as well as the Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee, have issued similar promises to return possibly fraudulent donations as bankruptcy lawyers attempt to claw back funds.

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The Daily Wire   >  Read   >  Bahamas Holding $3.5 Billion Of FTX’s Cryptocurrency For ‘Safekeeping’