FTX seeks to cover $8 billion hole as regulators freeze assets

abdelaziz Fathi

The Securities Commission of the Bahamas is clamping down on distressed crypto exchange FTX, having frozen its local subsidiary’s assets just as its founder scrambles to raise billions in funds to stave off the collapse of his empire.

FTX

The Bahamas securities regulator said it had frozen the assets of FTX Digital Markets and related parties, suspended its registration in the country and appointed a provisional liquidator for the unit. The provisional liquidation is a regulatory act to safeguard all assets for the time being, as opposed to distributing the company’s assets to creditors.

In a statement, the SCB said “The powers of the dirsectors of FDM have been suspended and no assets of FDM, client assets or trust assets held by FDM, can be transferred, assigned or otherwise dealt with, without the written approval of the provisional liquidator”.

The commission added that the move comes as CEO Sam Bankman-Fried faces heightened scrutiny and it became aware of “public statements suggesting that clients’ assets were mishandled, mismanaged and/or transferred to Alameda Research.”

Elsewhere, the US Department of Justice and the Securities and Exchange Commission also launched joint investigations into Bankman-Fried’s business to determine whether any criminal activity or securities offences have been committed. Specifically, regulators are parsing whether FTX and its founder have been secretly trading with customer funds via Alameda.

Per leaked reports, FTX’s downfall stemmed from Bankman-Fried’s efforts to save other crypto firms, which ultimately left his trading unit in financial hole of up to $8 billion as customers rush for the exit. Concerns about the world’s second largest cryptocurrency exchange’s financial health reportedly triggered huge withdrawals in just three days.

However, the crisis only surfaced last week by reports that the balance sheet of Alameda Research was loaded with billions of dollars-worth of FTT tokens. The revelation implied that any volatility in the price of the exchange’s native FTT token could endanger the crypto hedge fund also owned by Bankman-Fried.

Stuck without a buyer, Bankman-Fried apologized to his staff and the crypto community, saying he had “fucked up” in his calculations and in his communications during the crisis. Now, the 30-year-old CEO is searching for alternative backers after Binance pulled out of the deal, citing its due diligence on FTX and reports about US investigations into the company.

Read this next

Digital Assets

BlockDAG Presale Raises $9.9M as Batch 5 Nears Sell-Out Amid Bonk’s Fluctuating Trading Volume & Spell’s Bullish Price

Explore BONK’s trading volume, SPELL’s market shifts, and why BlockDAG’s 10,000 ROI makes it an ideal crypto for savvy investors in 2024.

Digital Assets

Bybit expands into Europe amid regulatory scrutiny

Dubai-based cryptocurrency exchange Bybit is expanding its operations in Europe after encountering regulatory challenges in Hong Kong.

Digital Assets

Cathie Wood’s sponsored Bitcoin ETF sees historic $200 million inflows

The ARK 21Shares Bitcoin ETF (ARKB), co-sponsored by Cathie Wood’s ARK Invest, registered historic inflows exceeding $200 million on Wednesday, signaling a robust appetite among investors for Bitcoin-centric investments.

Digital Assets

Sam Bankman-Fried might see his 25-year sentence halved

Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, was sentenced to 25 years in federal prison by a Manhattan court on Thursday. This comes after he was convicted of defrauding customers and investors, with Judge Lewis Kaplan highlighting the potential future risks posed by Bankman-Fried.

Technical Analysis

EURJPY Technical Analysis Report 28 March, 2024

EURJPY currency pair under the bearish pressure after the pair reversed down from the major resistance level 164.25, which also stopped the sharp weekly uptrend at the end of last year,

Digital Assets

BlockDAG’s Presale Hits $9.9M, MultiversX & MINA Price Predictions Show Green

Read about BlockDAG’s promising $10 prediction and insights on MultiversX Price Prediction as MINA’s potential unfolds.

Digital Assets

Rockstar Co-Founder and All-star Line Up Join Advisory Board to Take Metacade into Post Beta Orbit

Metacade, the revolutionary Web3 gaming platform, prepares to streak out of beta with a slew of ground-breaking initiatives that will redefine the way blockchain games are developed.

Retail FX

Prop firm The Funded Trader shuts down, claims relaunch in April

Prop trading firm The Funded Trader has ceased all operations, with claims for a relaunch in the near future.

Digital Assets

Ethereum-Based Tokenized Real Estate Platform USP Launches On Republic

How This Californian Startup Is Revolutionizing Real Estate Investment through Ethereum-Based Tokenization.

<