Bahamas regulator seizes $3.5 billion in FTX crypto assets for ‘safekeeping.’

The Bahamas Securities Commission seized cryptocurrency worth $3.5 billion from the collapsed crypto exchange FTX. The watchdog confirmed late Thursday that funds were taken from FTX’s Bahamian subsidiary, FTX Digital Markets, and moved into its own digital wallets “for safekeeping.” The regulator had previously confirmed holding some of FTX’s digital assets but did not specify how much it held. According to the commission, the funds were valued at more than $3.5 billion at the transfer time. The transfer of funds took place on Nov. 12, the day after FTX filed for Chapter 11 bankruptcy protection in the United States. According to the Bahamas Securities Commission, the funds are held on a “temporary basis” until the Supreme Court directs them to be released to customers, creditors, or liquidators. The regulator said it took the funds after receiving information from Sam Bankman-Fried, FTX’s disgraced co-founder, concerning cyberattacks on FTX’s Bahamian division.

It said there was a “significant risk of imminent dissipation” of the assets under FTX Digital Markets’ control. After FTX filed for bankruptcy, it was targeted in a suspected hack that saw $477 million drained from the firm’s crypto wallets. The identity of the perpetrator is not yet known. The Bahamian regulator has been scrutinized over its role in the FTX collapse and subsequent legal proceedings. The commission wanted to handle insolvency proceedings for FTX in the Bahamas. But FTX’s U.S. lawyers contested the move, alleging in a Nov. 17 filing that the regulator coordinated with Bankman-Fried to gain “unauthorized access” to FTX systems to transfer digital assets to its custody.