By Alicia Maher
Market regulators in the Bahamas have put a freeze order on assets belonging to FTX and related entities. It is one of the cascading effects of FTX’s collapsing experience. The Sam Bankman-Fried-led crypto exchange is undergoing one of the most dramatic collapse processes in the industry.
The Bahamian Decision
The Securities Commission of the Bahamas made the announcement on Thursday. The Commission’s press release stated that the move was a prudent action. It also said it is designed to save assets and ensure the country’s stability.
The Bahamas has equally appointed a liquidator. FTX Trading operates a subsidiary company in the country, FTX Digital Markets, and it operates as FTX.com. The exchange has its HQ in the Bahamas but it is different from the American operation, FTX.US.
The press statement mentioned that the Commission has noted public sentiments stating that funds were mismanaged. Some went further to say the funds were sent to Alameda Research. The statement said that such would be against regular governance against clients’ agreement, and it is unlawful.
FTX’s problems began last weekend and the crypto exchange is currently on the edge of collapse. Binance, FTX’s major rival, entered an initial bid to buy the exchange but pulled out again. Binance cited fund mishandling and investigation from US agencies.
FTX urgently needs to cover an $8 billion shortfall as it has halted most withdrawals and not processing demands. The company’s CEO, Bankman-Fried, is now trying to raise fresh capital.
Japan Follows Suit
But direct action against FTX did not happen in the Bahamas alone. The Japanese Kanto Finance Bureau has equally ordered the FTX subsidiary in Japan to hold its activities. The order states that nothing should be done till the 9th of December.
Furthermore, the regulator has said FTX should present a plan to improve its business by the 16th of November. Crypto regulations in Japan make it compulsory for exchanges to keep clients’ funds separately from their assets. But FTX’s withdrawal suspension reveals that it did not abide by every domestic regulatory guideline.
The Finance Minister, Shunichi Suzuki, said regulators have to do within their power to protect Japanese FTX users. Speaking at a press briefing on Friday, he said it is regrettable that things have come this far. The US Securities and Exchange Commission, as well as the Justice Department, have begun investigating FTX. Their findings are expected to be published.