Securities Commission probes collapse of FTX

NASSAU, Bahamas, Nov 16, CMC – The Securities Commission of The Bahamas (SCB) Wednesday said it is working with other regulators on matters dealing with the collapse of the Nassau-based FTX, with the government expressing confidence in the Commission’s ability to handle the situation.

FTX moved its headquarters from Hong Kong to The Bahamas last year and the police here have already announced an investigation into FTX that had been backed by elite investors like BlackRock and Sequoia Capital, rapidly becoming one of the biggest crypto exchanges in the world.

“In light of the collapse of FTX globally and the provisional liquidation of FTX Digital Markets Ltd., a team of financial investigators from the Financial Crimes Investigation Branch are working closely with the Bahamas Securities Commission to investigate if any criminal misconduct occurred,” the Royal Bahamas Police Force said in a statement.

In addition to the SCB probe, the US Justice Department is also investigating FTX.

In its statement on Wednesday, the SCB said that it will assist police in their probe if and when required and that PricewaterhouseCoopers has been added as a second provisional liquidator to the FTX case.

“Given the magnitude, urgency, and international implications of the unfolding events with regard to FTX, the commission recognised that it had to, and moved swiftly to use its regulatory powers under the Digital Assets and Registered Exchanges Act, 2020 (DARE Act) to further protect the interests of clients, creditors, and other stakeholders globally of FTX Digital Markets Ltd. (FDM),” the SCB said.

It noted that over the “coming days and weeks” it expects to engage with other supervisory authorities on a regulator-to-regulator basis “as this event is multi-jurisdictional in nature,” without elaborating.

The SCB said it is the lead agency in The Bahamas investigating the events surrounding the fall of FTX, which collapsed under a liquidity crunch last week, noting also that it is investigating many more of FTX’s entities than just its licensee FTX Digital Markets.

“The Commission is the lead authority in The Bahamas conducting the investigations into the events and parties, including, but not limited to, FTX Digital Markets Ltd. (a regulated entity), FTX Trading Ltd., Alameda Research Ltd. and other related entities whose centre of main interest, direction and management were purportedly located in The Bahamas,” the statement said.

“The investigations into these events are on-going, and the Commission will extend its full assistance to the police if and when required.”

Meanwhile, Deputy Prime Minister Chester Cooper said he is confident SCB’s ability to handle matters related to FTX’s fallout.

“We have had curve balls thrown at us before in financial services and we persevered. We have pivoted in financial services many times and I expect that we’re going to do likewise in the digital assets business.” Cooper told reporters, adding “let me just say that the Prime Minister (Phillip Davis) will be speaking to this FTX matter.

“It’s in his remit as Minister of Finance. It’s a matter for the regulators. I can tell you though that I am confident in the regulators and I’m confident about the laws governing financial services in The Bahamas,” Cooper told reporters.

“As it relates to the specifics, as you are well aware, the Securities Commission is handling the matter and anything from the government will come from the minister of finance that happens to be the prime minister.”

Media reports here said that FTX’s founder, Sam Bankman-Fried, is weathering the storm here, reportedly holed up at the luxury western New Providence community of Albany.

Last Friday, FTX filed for bankruptcy in the US. Its collapse was preceded by the decision to lend billions of dollars’ worth of customer assets to fund risky bets by Alameda, Bankman-Fried’s crypto hedge fund, The Wall Street Journal reported last Thursday.

The main opposition Free National Movement (FNM) has called on the government to provide the investing public with a “clear and cogent statement” regarding FTX.

FNM leader, Michael Pintard said the public needs to know what if any exposure exists for the government in view of the developments, and if there are any implications for the national budget.

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