Regulator ‘freezes’ FTX and sends in liquidator



• Top KC to be joined by ‘Big Four’ accounting firm

• Crypto exchange spent $74m on local real estate

• FTX Bahamian staff pledging to ‘do what’s right’


Tribune Business Editor


Regulators yesterday moved to protect clients of The Bahamas’ flagship crypto currency investor by “freezing” its assets, and seizing control of the company, amid reports it acquired $74m in local real estate this year alone.

The Securities Commission, which Tribune Business revealed yesterday was probing FTX’s near collapse, said the Supreme Court had approved Brian Simms KC, the Lennox Paton partner and head of its litigation practice group, as joint provisional liquidator with powers to take control of the crypto exchange’s Bahamian company and affiliate entities.

The digital assets regulator, in a statement, said it had suspended FTX Digital Markets’ registration under the Digital Assets and Registered Exchanges (DARE) Act following the multi-billion liquidity crisis sparked by a client stampede for the exits. The move also comes amid multiple ongoing probes by supervisory authorities and law enforcement agencies worldwide, including the US Justice Department and Securities & Exchange Commission (SEC).

The freeze obtained by the Securities Commission means that no assets belonging to FTX Digital Markets, or client assets that it holds in a trust or fiduciary capacity, can be sold, “transferred, assigned or otherwise dealt with” without Mr Simms’ permission. The Lennox Paton partner has taken full control of the crypto exchange’s main Bahamian company, with the powers of its directors now suspended via the Supreme Court Order.

The Securities Commission, in a statement, said it had been left with little choice to act given that FTX’s international business was seemingly on the verge of bankruptcy amid allegations that client monies have been misused. “The Commission is aware of public statements suggesting that clients’ assets were mishandled, mismanaged and/or transferred to Alameda Research,” it added, the latter being a company controlled by FTX founder, Sam Bankman-Fried.

“Based on the Commission’s information, any such actions would have been contrary to normal governance without client consent, and potentially unlawful.” The provisional liquidation, besides seeking to protect clients and investors, is also a means to safeguard The Bahamas’ integrity and reputation. While domiciled in Antigua and Barbuda, FTX is headquartered in The Bahamas, and thus this nation must lead the regulatory charge over its woes.

Neither Christina Rolle, the Securities Commission’s executive director, nor Mr Simms, could be reached for comment before press time last night. The latter was said to be working feverishly to protect client and FTX assets, including the latter’s multiple New Providence real estate holdings, by quickly gaining control of the crypto exchange’s local bank accounts, offices and all documents and files.

Multiple sources, though, told Tribune Business that Mr Simms will be working on the provisional liquidation - which is highly likely to become an official full winding-up overseen by the Supreme Court - in partnership with one of the so-called ‘Big Four’ accounting firms - PricewaterhouseCoopers (PwC), EY (Ernst & Young), Deloitte & Touche and KPMG.

This newspaper was told some hours before the Securities Commission announced the provisional liquidator’s appointment that PwC was the likely front-runner to work on the FTX matter, with EY a close second.

Several sources, though, voiced surprise that an attorney had been appointed as FTX Digital Markets’ provisional liquidator, even though Bahamian law allows this via the Companies Winding-Up Act and subsequent reforms to this law. Qualified accountants are normally the ones chosen as liquidators, with attorneys hired to provide them with legal guidance and advice.

Tribune Business, though, understands that checks and due diligence is being conducted to determine of any of the ‘Big Four’ firms are potentially “conflicted” - and thus prevented from acting in the FTX Digital Markets provisional liquidation - by virtue of having worked for the company, its affiliates or founder Sam Bankman-Fried in The Bahamas or elsewhere in the world.

Once these checks are completed, and the accounting firm selected, it was suggested they may swap roles with Mr Simms. The latter would become legal adviser to the provisional liquidation, and an accountant the provisional liquidator, with Mr Simms’ appointment necessitated by the urgency to freeze FTX’s operations while the due diligence checks are completed.

Valdez Russell, FTX Digital Markets’ vice-president of communications, last night told Tribune Business its 50-60 local staff were still employed by the company and pledged they would all co-operate with the provisional liquidator to protect The Bahamas’ brand name and integrity.

“We continue with business in the best possible way given the circumstances,” Mr Russell said of the employees, whose future with FTX is increasingly uncertain. “These individuals remain engaged and employed with FTX. Within the scope of Bahamian law, and individuals in the country who want to see this situation resolved, we will remain co-operative. The Bahamas deserves that as a compliant and well-regulated jurisdiction.”

He predicted that while FTX’s international operations may eventually emerge from the provisional liquidation process, they were unlikely to be in the same form. “Our focus has been doing right for, to and by Bahamians,” he added of his local colleagues. “I think that the iteration of FTX globally will look different, but we have to do right for our clients, our investors and our industry. That remains at the core in all regards.

“The Securities Commission of The Bahamas has acted swiftly to demonstrate the importance of their role in maintaining the integrity and jurisdictional reputation of The Bahamas. As FTX strives to do right for customers, investors and employees, the involvement of a provisional liquidator will prove helpful in a process that facilitates the requisite due diligence that will contribute to a better future for digital assets in a global landscape.”

Meanwhile, Tribune Business was shown a report, which checks confirmed was genuine and had been well-researched, disclosing that FTX has acquired some $74.23m in west New Providence real estate during 2022 alone. Most of these purchases involved property in the high-end Albany community, along with the acquisition of units in the Veridian Corporate Centre, which was developed by Island Luck gaming tycoon, Sebas Bastian.

The acquisitions by FTX Property Holdings, the crypto exchange’s real estate arm, ranged in value from a high of $30m to $8.9m, $7.479m, $7.311m, $7m and $6.75m at Albany, according to the report, which was being widely circulated on social media. Some $4.5m was also spent to acquire the Bayside Executive Park site for its planned $60m headquarters, which is now unlikely to proceed, but sits directly across from Mr Simms’ offices at Lennox Paton.

The report also showed a $2.29m purchase at the Veridian Corporate Centre. “The corporate offices for FTX are currently housed at the Veridian Corporate Centre, which was originally built and sold by Sebas Bastian,” the document said. “These are not rentals or leases. FTX has purchased these units outright.

“Additionally, there is one purchase of a condominium at One Cable Beach for $2m made by Sam Bankman-Fried directly in late 2021.” It is unclear whether the latter, especially given that it is in the FTX founder’s name, will be included in the provisional liquidation. The same applies to the FTX Property Holdings assets, although this entity is likely to be affiliated with FTX Digital Markets and therefore be covered.

The real estate figures, though, show just how large and impactful a presence FTX has been in the Bahamian economy since it switched its headquarters from Hong Kong to The Bahamas in late 2021 shortly after the September general election. The company’s rapid descent, and plunge, into provisional liquidation means a major source of investment and donations to non-profits and charities has suddenly been stripped from the economy.

Justifying its actions, the Securities Commission said: “Since the unfolding of events involving FTX Digital Markets, the Commission has proactively dealt with the situation and continues to do so. The Commission determined that the prudent course of action was to put FTX Digital Markets into provisional liquidation to preserve assets and stabilise the company.

“The Commission is committed to working with the provisional liquidator to endeavour to obtain the best possible outcome for the customers and other stakeholders of FTX.”

The Securities Commission action came after another frenetic day in which Mr Bankman-Fried sought to find new saviours after rival crypto exchange, Binance, pulled out of a rescue deal for beleaguered FTX on Wednesday. International reports pegged the liquidity and funding shortfall that FTX and its founder have to bridge at up to $8bn as they seek new emergency financing.

Time may have run out, though, as a result of The Bahamas’ provisional liquidation. Major investors also wrote-off their entire investment in FTX, saying the crypto exchange is now essentially worthless, with Sequoia Capital, a Silicon Valley-based private equity fund, wiping out its $214m holding in the company.

Meanwhile, the SEC and US Justice Department probes are said to be focusing on whether Mr Bankman-Fried and FTX used customers’ deposits to fund bets and trading activities at his hedge fund, Alameda Research. Client funds are supposed to be kept separate from company assets, and there were suggestions the FTX founder has committed the “ultimate sin” by tapping into FTX’s custodial assets to fund Alameda Research.


lobsta 4 months, 2 weeks ago

Apart from the charitable spending I don't see much of an impact on the Bahamian economy. Doubtful much in taxes were paid outside the real estate transactions. Mostly one-off payments to people who weren't and won't be hurting.


GodSpeed 4 months, 2 weeks ago

Okay, I was wondering why a lawyer was being put in the role where an accountant should be.

As for FTX, it's a shame. I hope many Bahamians didn't lose money but those who did are probably mostly the most wealthy and politicians who thought they had a clear inside to the biggest thing in the Bahamas.


Emilio26 4 months, 2 weeks ago

That's why I was sceptical about investing in Bitcoin and cryptocurrencies because I know the value of those things are always fluctuating.


AnObserver 4 months, 2 weeks ago

You can't "invest" in magical Internet beans. The whole thing is a scam, their house of cards is collapsing.


TalRussell 4 months, 2 weeks ago

Still as your trusted of comrades, I must highlight how the RedPart's two significant mouthpieces Thee Mr. Minnis and sidekick Pintard have reportedly now living in 'self silence imposed exile' on all FTX bankruptcy matters,

Just as FTX in September 2019, had fled the old colony of Hong Kong for our still a colony.

What you think were the deciding roots behind their sudden Hong Kong exit — Yes?


TalRussell 4 months, 2 weeks ago

*Correction: FTX exited Hong Kong in September 2021.


IslandWarrior 4 months, 2 weeks ago

Bahamas-based VC fund "commits" USD 75 mln to Romanian startup ZoidPay

04 November 2022

Romanian "blockchain technology and crypto liquidity startup" ZoidPay, which aims to become "the largest open source Web 3.0 architecture platform in the world," attracted a USD 75 million investment from GEM Digital Limited ("GEM"), a Bahamas-based investment firm "focused on the area of blockchain and cryptocurrencies," Ziarul Financiar announced.

ZoidPay, the leading Web 3.0 architecture provider, has secured an investment commitment of USD 75 mln from digital asset investment firm GEM Digital Limited ("GEM"), the official press release reads, though.

Superficial investigations on the GEM digital asset investment firm reveal, however, what this investment in the metaverse actually is, and whether one should or not put their money into the coins or tokens ZoidPay will most likely soon issue. The answer is: better "commit" but rather not pay, if possible. Bahamas-based GEM Digital Limited has "committed" billions of US dollars over the past several months to such ambitious projects - nothing wrong here. But in contrast to the most funding news, in which an investment institution directly announces an actual investment in a project, GEM Digital is basically announcing that it "is issuing an investment commitment," influential crypto blog Wu-talk.com explains.

In brief, such "investment commitments" are primarily aimed at increasing awareness among investors hoping for stellar profit rates derived from trading coins and tokens.

"In other words, GEM Digital's investment agreement is more like a cooperation and sharing agreement, where both parties sign a so-called huge investment agreement, create good news in the market, and then collaborate to make profits and share them," explains Colin Wu in an article dated July (since then, GEM has "committed" more hundreds of millions of dollars).

In the crypto world more than in other investment universes, the meme stories filled with buzzwords are gold ("developing the go-to open architecture for building the next generation of financial services, scaling the first on-demand Metaverse, facilitating the first-ever bank acquisition by a blockchain firm, and launching a Web 3.0 super App" - this is what ZoidCoin plans to achieve). The scheme resembles the digital version of the gem scam - a confidence trick usually performed against tourists in Thailand, where the targets are convinced to buy fake gems (startups) at a discount by building confidence through fake third-party (venture funds) testimonials.

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IslandWarrior 4 months, 2 weeks ago

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ZoidPay might genuinely plan to become "by the end of the first quarter of 2023, the biggest Web 3.0 architecture provider in the world," and there's no reason to doubt their good faith - but this is still a big promise. And, if successful, this means there would be nothing left to be achieved by Elrond Network - which also promises to deliver the MultiversX project, through which it wants "to create a global ecosystem that integrates the concepts of metaverse, Web3 and blockchain."

In separate news, Ziarul Financiar published a warning note from the Romanian Financial Supervising Authority (ASF) that points to the increasing financial criminality in the new crypto-world. ASF warns potential investors that using the services of an unauthorized entity will not entitle them to compensation through the Investor Compensation Fund.

Regarding virtual currencies, ASF reiterates that they are not considered financial instruments, as they are defined by Law no. 126/2018, so that entities issuing virtual currencies, their trading and the platforms on which they are traded do not fall under the Authority's supervision.



TalRussell 4 months, 2 weeks ago

Would remove the scary implosion if bankruptcy trustee liquidator King's Counsel Comrade Brian Simms, was to put the colony's popoulaces' at ease by assuring all that neither the National Insurance Board, Bank of Bahamas, Sovereign Fund nor any other government identity have sunk millions into BTX crypto currencies'?  

As scary to some extent is the blanket FTX silence imposed by the King's Official Opposition leaderships, House-seated Members and Upper Red Chamber  Members.

From bad governance to being a lousy running to hide government-in-waiting — Yes


IslandWarrior 4 months, 2 weeks ago

FTX Declares Bankruptcy and Sam Bankman-Fried Resigns in Latest Crypto Blowup Kyle Barr

Sam Bankman-Fried announced he was stepping down as CEO from his crypto exchange FTX. RIP FTX. The company announced Friday morning that they were starting Chapter 11, AKA reorganizational bankruptcy proceedings. In addition, CEO Sam Bankman-Fried’s other crypto firm, Alameda Research and Weste Realm Shires Services, which is also known as FTX.US, are also tangled up in the proceedings.

The 30-year-old supposed wunderkind Bankman-Fried, once considered one of the top minds in the crypto sphere, also announced he was vacating his chair as CEO, and that John Ray III is stepping up as head honcho. According to the official press release, “Many employees of the FTX Group in various countries are expected to continue” during the bankruptcy proceedings.

As of now, most FTX users were still unable to withdraw their funds from the exchange. In the release, Ray said “stakeholders should understand that events have been fast-moving and the new team is engaged only recently,” though he did promise every stakeholder they will go forward with “thoroughness and transparency.” That’s probably not much comfort for the thousands of FTX users who had millions of dollars in crypto stored on the FTX exchange.

How did this all start? A report from CoinDesk made it clear that FTX had been effectively printing money using its own FTT crypto token to prop up Alameda Research, Bankman-Fried’s own crypto trading firm. A Thursday report from The Wall Street Journal clarified that FTX had used customer’s money to fund their own trading endeavors. Of the $16 billion customer assets under FTX’s control, Bankman-Fried reportedly leant half of that amount over to Alameda so it could engage in risky crypto investments. Throughout 2022, Bankman-Fried had been propping up other failing crypto firms and buying up the assets of failed ventures like Voyager and Celsius.

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IslandWarrior 4 months, 2 weeks ago

Once its rival crypto exchange Binance dumped its stock of FTT, the price of the exchange’s native coin plummeted, resulting in FTX faceplanting into a multi-billion dollar hole that it has not been able to pull itself out of.

It’s gone from bad to worse for what was once the third-largest crypto exchange by market cap. Late on Thursday, the Bahamas, where FTX was based out of, announced its Securities Commission had frozen all of FTX’s assets. According to an official release, the country also suspended the company’s official registration.

“The Commission is aware of public statements suggesting that clients’ assets were mishandled, mismanaged and/or transferred to Alameda Research. Based on the Commission’s information, any such actions would have been contrary to normal governance, without client consent and potentially unlawful,” the Securities Commission wrote.

Bankman-Fried has put the blame on his own shoulders, saying “I fucked up, and should have done better.” He also said he overestimated the margins for how much users had on FTX. As much as he might be placing the blame on himself, that still won’t stop the U.S. Department of Justice and The Securities and Exchange Commission from investigating whether FTX’s lending products were securities, and whether the exchange broke any laws.

BlockFi is Caught Up in FTX’s Failure Just like the collapse of the Terra stablecoin seven months ago, the calamity befalling the once-hailed crypto exchange FTX is set to take down multiple leaders of the crypto lending space. Late on Thursday, crypto lending platform BlockFi announced they were halting withdrawals.

The company tweeted they were keeping all crypto on their platform “until there is further clarity” from the ongoing collapse of once-billionaire Sam Bankman-Fried’s crypto firms FTX and Alameda Research. The company also begged users to not do any more crypto deposits on their BlockFi wallets until they could somehow, some way, sort out this mess.

“We, like the rest of the world, found out about this situation through Twitter,” the company wrote.

In its second quarter earnings report, BlockFi said they had $3.9 billion in client assets housed under their roof, though of course the price of crypto fluctuates so rapidly it’s hard to tell just how much crypto might be squirreled away. An unnamed source with knowledge of the matter told Bloomberg that BlockFi was working to move its assets over to FTX for custody, though the majority hadn’t yet been transferred. The company had also given loans to Alameda, though the source did not specify how much.

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IslandWarrior 4 months, 2 weeks ago

3 Earlier during this ongoing crypto winter, BlockFi cut 20% of its staff from all parts of its company. Later that same month, FTX handed the exchange $250 million in credit to keep itself afloat. At the time, FTX’s CEO Bankman-Fried said his company was “partnering” with BlockFi “so they can navigate the market from a position of strength.” In a Twitter thread, he further elaborated that BlockFi was acting preemptively to gain new cash flows “before it was necessary.”

A Few Crypto Folks Considered Propping Up FTX Binance and its CEO Chenpeng Zhao were originally set to buy out FTX, but after looking at its rival’s balance sheets and apparently smelling something not quite right, Binance tanked the deal. Justin Sun, the founder of Tron and its cryptocurrencies such as TRX JUST, then stepped up to potentially prop up the failing company. Sun told Bloomberg on Friday that they might be ready to provide a multi-billion dollar influx of aid to help the beleaguered FTX.

Sun had already struck a deal with FTX that allowed its token holders to withdraw their funds to external wallets, even though the exchange is still ostensibly closed to withdrawals. Earlier this morning, Tron’s tokens were selling at an enormous premium on FTX as users worked to get their tokens off the sinking ship that is Bankman-Fried’s prized exchange, according to a report from CoinTelegraph.


AnObserver 4 months, 2 weeks ago

The crypto market is a complete and utter scam. A giant ponzi scheme. Anyone claiming to be a crypto promoter is guaranteed to be a scammer. Run away. Run away as fast as possible.


sheeprunner12 4 months, 2 weeks ago

Please ....... Someone speak some sense into John Rolle's ear.

You can't get rid of our 242 coins, paper cash and checks. Just look at this crap called crypto currency.

Bahamians don't trust or want that.


TalRussell 4 months, 2 weeks ago

@Comrade SheepRunner12, what's with your reason be attempting to align our colony's Sand Dollar, alongside the stench of FTX"s crypto, who unlike our own colony does also mines its own sea waters Biscuit Dollar, of which you should take note of, are both backed by our Central Bank and Foreign Reserves Fund.

You just can't make up a Sand and Biscuit Dollar— Yes?


sheeprunner12 4 months, 2 weeks ago

TalRussell, I didn't mention the Sand Dollar.

But based on what you and I have seen since it was introduced into Exuma, is this digital currency being embraced by Bahamians?

Whether it is NP or islands that don't have banks?

Come on Tal, what say you?????


TalRussell 4 months, 2 weeks ago

@Comrade SheepRunner12, surely during at least one of your frequenting conversations with your Long Island's, stillHouse-seated MP, must've come up as to why the imposed blanket code of silence over past 5+ days or so, so as not to get the entire RedParty's leadership any more than it done has been dancing with 2021's initial negotiations which was to eventually result in the PLP's brungin' FTX to its new colony, all the way from out of the UK's former colony of Hong Kong?

Maybe needed more time to attempt to wash overboard, those Reds, most FTX blemished?

You tell me— Yes?


TalRussell 4 months, 2 weeks ago

Nov.13/22 @ 12.36 AM. Sources are asking if the Bahamian Liquidator Brian Simms was aware that special interests individuals and some employees since bankruptcy, mysteriously were allowed to access their Bahamian crypto accounts to withdraw $7+ million from their FTX Bahamian accounts -- Yes?


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