FTX debtors say frozen assets worth just $167 million

abdelaziz Fathi

Debtors of the bankrupt cryptocurrency exchange FTX cast doubt over the statement released by Bahamas regulators on Friday, which claimed they seized $3.5 billion worth of cryptocurrency.

When FTX spiraled toward collapse in mid-November, Bahamian regulators took control of digital assets worth just $296 million, including 195 million FTT, 1,938 ETH and other miscellaneous coins that “do not have substantial value,” the creditors say.

Assuming the entire amount of FTT tokens could be sold at spot prices, the total sum taken from FTX’s Bahamian subsidiary was worth $167 million on December 30, 2022.

FTX said in a media release late Friday that the seized crypto assets are currently held in a single blockchain wallet at the digital asset custody platform Fireblocks.

“The FTX Debtors urge the Bahamas Commission to clear up any confusion created by their recent statements and provide the public with accurate information concerning the cryptocurrency seized and how it was valued for the purposes of these statements,” the statement reads.

FTX and its affiliated debtors said they informed the Bahamas Commission that FTX’s disgraced co-founders, Sam Bankman-Fried and Gary Wang, had no right over any seized assets.

“FTX Debtors will seek the return of the seized cryptocurrency promptly to their chapter 11 estates for the benefit of creditors. The Bahamas Commission regulated only FTX Digital Markets Ltd. (“FTX DM”), a local service company in The Bahamas. FTX DM is not the owner or operator of the FTX.com exchange, or the owner or custodian of the cryptocurrency seized,” they added.

FTX’s new CEO and restructuring veteran John Ray accused Bahamian authorities of seizing hundreds of millions of dollars in crypto without explanation. The regulator had previously confirmed it was holding some of FTX’s assets but did not specify the amount.

At the time, Ray said Sam Bankman-Fried aided in this process after the exchange filed for bankruptcy and its assets were supposed to be frozen. But in an interview with Vox, SBF expressed serious disdain for regulators as he already transferred those funds to the SCB’s custody.

The securities regulator in the Bahamas — where FTX is headquartered — conceded that funds were valued at more than $3.5 billion, based on market pricing at the time of transfer. The authorities justified the move to take control of assets on November 12, citing “urgent interim regulatory action was necessary to protect the interests of clients and creditors of FDM.”

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