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Bahamas authorities seized $3.5 billion in FTX assets

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The Bahamas’ securities regulator revealed on Thursday that it had on November 12 confiscated $3.5 billion in digital assets belonging to FTX Digital Market. 

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The watchdog confirmed the exact amount seized from FTX’s Bahamian subsidiary, FTX Digital Markets, in a media release late on Thursday. It also stated that the monies were transferred into its own digital wallets “for safekeeping.” The regulator previously acknowledged that it was in possession of some of FTX’s digital assets, but it did not say how much.

According to the commission, the monies were worth more than $3.5 billion based on market rates at the time of transfer. The transfer happened on November 12, the day following FTX’s filing for Chapter 11 bankruptcy relief in the United States. The money is being kept “temporarily,” according to the Bahamian Securities Commission until the Bahamas Supreme Court orders it to be given to clients, creditors, or estate liquidators.

The regulator claimed that it withdrew the money after learning about cyberattacks on the Bahamian unit of FTX from discredited co-founder Sam Bankman-Fried. Following FTX’s bankruptcy filing, the company was allegedly the subject of a breach that resulted in the theft of $477 million from its cryptocurrency wallets.

The perpetrator’s identity is yet unknown. The Bahamian regulator has come under fire for its part in the demise of FTX and related litigation actions. The commission sought to manage FTX’s bankruptcy procedures in the Bahamas.

The move was opposed by FTX’s American attorneys, who claimed in a filing on November 17 that the regulator worked with Bankman-Fried to get “unauthorized access” to FTX systems in order to transfer digital assets to its own possession. 

The Bahamian regulator responded by calling the allegations “inaccurate” and stating that it moved the funds to safeguard the interests of investors and clients. Bankman-Fried, 30, who was formerly the CEO of FTX, was detained in the Bahamas before being extradited to the US, where he is currently awaiting trial on accusations of fraud, conspiracy to launder money, conspiracy to defraud the US, and conspiracy to break campaign finance rules.

His parents, who are both Stanford law professors, agreed to sign a $250 million recognizance bond and pledge their California house as security in exchange for his release. According to news sources, two additional friends who had substantial assets also signed. After posting a $250 million bond, he was freed last week.

Michael Lewis, the author of “The Big Short,” has reportedly been visiting him at his parents’ California home. On January 3 in federal court in Manhattan, Bankman-Fried is anticipated to be charged and enter a plea. 

The SEC alleges in its civil complaint, “Bankman-Fried was orchestrating a massive, yearslong fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire.”

The announcements made by the Bahamian regulator are favorable for FTX’s clients and creditors, but it is uncertain whether they will receive their money right away since the bankruptcy of FTX is being handled in the United States in accordance with American law while the company is being liquidated in the Bahamas. 

Binance

Binance withdrawals hit $1.9 billion in 24 hours

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Binance, the biggest cryptocurrency exchange in the world saw $1.9 billion worth of withdrawals in only one day. Regulators are closely monitoring how cryptocurrency exchanges like Binance and the now-bankrupt erstwhile rival FTX handle customer deposits.

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Image Source: taiwannews.com.tw

The U.S. Securities and Exchange Commission charged FTX founder Sam Bankman-Fried on Tuesday with defrauding investors. According to Nansen data, the $1.9 billion in withdrawals of Ethereum-based tokens represents the highest 24-hour outflow of assets since June 13 and is responsible for most of the money taken out during the previous seven days.

According to Binance CEO Changpeng Zhao, the exchange has once witnessed “some withdrawals” totaling over $1.1 billion. He then stated that the business had experienced worse days before. He tweeted, “We’re seeing the money flowing back already. We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits.”

Zhao, also known as “CZ,” claimed that after FTX’s demise in November, people had lost faith in the cryptocurrency industry. Sam Bankman-Fried, the founder of Binance’s former rival, was arrested this week in the Bahamas after being charged with a crime in the US. Early in November, FTX collapsed, sparking a surge of public calls for more regulations of the cryptocurrency sector.

Sam Bankman-Fried, the exchange’s founder, had bragged that it was the “most regulated,” yet he had established it in the Bahamas, where regulation was lax and had covertly exploited customer deposits. Attorneys for FTX said during a bankruptcy hearing that Bankman-Fried operated the exchange as a “personal fiefdom.” According to Bankman-Fried, he didn’t intentionally do anything improper.

The cost of digital coins has been falling due to worries about the industry’s state. With a year-to-date loss of more than 60%, the price of bitcoin was last going below $18,000.

However, following FTX’s stunning collapse, Binance’s company is also being scrutinized. According to unnamed sources cited by Reuters on Monday, US authorities were considering concluding its probe into Binance’s money laundering by “filing criminal charges against specific officials, including founder Changpeng Zhao.”

Bankman-Fried was charged with eight crimes, including conspiracy and wire fraud, on Tuesday in the US. US markets watchdogs have also accused Bankman-Fried of scamming investors and clients separately.

Bankman-Fried, often known as “SBF,” is a well-known figure in the cryptocurrency world who was instantly shunned after his business experienced a liquidity difficulty and declared bankruptcy last month, preventing at least one million depositors from having access to their money.

Splits among US Department of Justice officials are delaying the resolution of a protracted criminal investigation into Binance, the largest cryptocurrency exchange in the world, as per Reuters. The inquiry was launched in 2018 and is concentrated on Binance’s compliance with American anti-money laundering rules and sanctions.

As per Reuters several of the at least six federal prosecutors working the case feel that the information previously acquired supports taking serious action against the crypto exchange and charging certain officials, including the founder Changpeng Zhao, with crimes. The sources claimed that others have urged for taking the time to consider further evidence.

Sam Bankman-Fried

Former FTX CEO Sam Bankman-Fried arrested in the Bahamas

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Sam Bankman-Fried, an American entrepreneur, businessman, and former billionaire, was detained in the Bahamas after US prosecutors filed criminal charges against him.

Sam Bankman-Fried, the former CEO of FTX, was detained on Monday in the Bahamas based on allegations brought in the United States. Several charges of wire fraud and conspiracy in relation to the failure of his crypto exchange are among the federal accusations that were revealed on Tuesday morning.

Sam Bankman-Fried
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The Office of the Attorney General of the Bahamas stated in a statement issued on Monday that Fried’s arrest is following the receipt of formal information from the USA that it has brought criminal charges against Fried and is likely to request his extradition.

Fried was taken into custody, according to the U.S. Attorney’s Office for the Southern District of New York, which also noted that the arrest was undertaken in accordance with a sealed indictment.

Seven charges, including wire fraud and conspiracy to commit wire fraud against lenders and customers, securities fraud, conspiracy to commit money laundering, and infringements of campaign finance laws, were included in the grand jury’s indictment against Fried.

The Justice Department and federal regulators were looking into whether FTX utilized client cash to support risky wagers at Fried’s hedge company, Alameda Research.

The Department of Justice is exploring charges against Binance, the top exchange in the cryptocurrency market, at the same time as US officials have indicted Bankman-Fried. According to Reuters, some Justice Department officials think they have enough evidence in their extensive investigation of Binance to bring charges against the firm and some of its top executives.

According to Reuters, Binance is being looked at for potential money laundering and sanctions violations. Four people with knowledge of the situation told Reuters that other department members have argued in favor of devoting time to reviewing further evidence.

Additionally, the arrest occurred a day before Fried was supposed to testify before American lawmakers on Tuesday and provide testimony via video link.

According to Reuters, Bankman-Fried surreptitiously transferred $10 billion in FTX customer money to his private trading company, Alameda Research, which led to FTX’s liquidity crisis.

Sam Bankman-Fried attempted to separate himself from allegations of fraud in a series of statements and media interviews acknowledging risk management problems but claiming he never purposefully mixed customer assets on FTX with assets at Alameda.

Before it shut down last month, FTX was among the biggest crypto exchanges in the world. In a single day, users withdrew around $5 billion worth of cryptocurrency as worries about the exchange’s viability grew. On November 11, Bankman-Fried submitted his resignation, and FTX declared Chapter 11 bankruptcy.

Additionally, Bankman-Fried was sued by American cryptocurrency investors who claimed that he and numerous celebrities who advocated FTX used misleading tactics, causing the investors to lose $11 billion in losses.

The collapse of FTX was the latest upheaval for the cryptocurrency market this year. A string of meltdowns that have brought down other significant players like Voyager Digital and Celsius Network has caused the total cryptocurrency market to decline.

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Coinbase to lay off more employees amid FTX saga

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Leading cryptocurrency exchange Coinbase will shortly announce more layoffs as the industry faces yet another existential threat following the FTX collapse.

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According to recent reports, the present crisis in the cryptocurrency market led Coinbase, one of the biggest crypto platforms, to lay off 60 of its employees. Alesia Haas, CFO, referred to the modifications as “surgical” measures meant to save costs amid trying times.

According to The Information, Coinbase is expected to lay off about 60 employees from its recruitment and institutional induction teams. The layoffs were communicated internally. The layoffs will occur at a time when the cryptocurrency market as a whole is in disarray as a result of the ongoing FTX controversy, which has spooked investors and further depressed cryptocurrency valuations.

Though they are not nearly as astounding as Meta’s decision to lay off over 11,000 employees recently, Coinbase’s most recent series of layoffs is an indication that the crypto exchange may be attempting to cut expenses in the continuing bear market. Nevertheless, this development barely changes the picture of a week that has been filled with terrible news for the cryptocurrency industry.

According to reports, Coinbase had already attempted to minimize costs before the FTX issues as dropping cryptocurrency trading volumes were harming this year’s profitability. Due to the economic slump, the cryptocurrency exchange company stated in June that it will be cutting 1,100 employees or 18% of its workforce.

As the value of Bitcoin and other cryptocurrencies continues to fall, the crash of the FTX cryptocurrency exchange has now brought about yet another wave of threats to the whole crypto industry.

When bitcoin was trading last week at over $21,500 and the market cap was over $1 billion, the cryptocurrency winter, which is expected to linger for the majority of 2022, appeared to have eased its hold. Hopes that a new bull run is about to begin, however, were dashed by FTX’s collapse this week.

At one point, the value of the cryptocurrency market fell below $850 billion, with bitcoin falling to a two-year low of about $15,500.

According to statistics from Nomics, transaction volume on Coinbase fell by over 75% in the hours after FTX announced its bankruptcy early on Friday. This is an indication that the company is starting to feel the pain of crypto investors pulling out of the increasingly unpredictable cryptocurrency market.

The majority of Coinbase’s user base, which consists primarily of newer investors who don’t trade frequently, generates 90% of the exchange’s revenue from the sizeable transaction fees it charges. Because of this revenue model, the company must constantly add new users in order to maintain its user base. Onboarding new users, however, could be challenging given that FTX’s collapse has undermined investor sentiment in the digital asset sector.

The price of cryptocurrencies plummeted this year as a result of rising interest rates and growing concerns about an economic slowdown, wiping out important firms like Three Arrows Capital, Celsius Network, and Voyager Digital. But once FTX started to show early signs of trouble, digital assets took a heavier hit.

FTX, which has a history of saving failing crypto companies, is considering its options in light of a liquidity crisis and is currently under investigation by US regulators for its management of customer cash and its crypto-lending activities.