Regulator denies asking FTX to prioritize withdrawals for Bahamian clients

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The statement from the Securities Commission of The Bahamas refutes a claim from FTX that it has been facilitating withdrawals in accordance with Bahamian regulations.

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Regulator denies asking FTX to prioritize withdrawals for Bahamian clients

The Securities Commission of The Bahamas (SCB) has denied instructing or authorizing crypto exchange FTX to prioritize withdrawals of Bahamian clients. 

In a statement on Nov. 12, the securities commission vehemently denied the contents of a Nov. 11 statement from FTX on Twitter that suggested it had been instructed by “Bahamian HQ’s regulation and regulators” to facilitate the withdrawal of Bahamian funds.

“The Commission wishes to advise that it has not directed, authorized or suggested to FTX Digital Markets, Ltd. the prioritization of withdrawals for Bahamian clients,” read the statement, which was shared on the SCB’s Twitter page. 

Securities Commission Addresses FTX Statement on Bahamian Withdrawals pic.twitter.com/OZKWwicSuN

— Securities Commission of The Bahamas (@SCBgov_bs) November 12, 2022

Since FTX paused withdrawals on Nov. 9, the crypto exchange’s customers have been attempting to find means to withdraw their locked funds, with much of the activity going through the Bahamas.

Strategies have ranged from buying non-fungible tokens (NFTs) on Bahamas-based accounts to offering FTX employees bounties to change their country of residence to The Bahamas.

Related: Sam Bankman-Fried is ‘under supervision’ in Bahamas, looking to flee to Dubai

However, the SCB has warned that any withdrawal of funds could be clawed back as part of the firm’s potential liquidation proceedings.

“The Commission further notes that such transactions may be characterized as voidable preferences under the insolvency regime and consequently result in clawing back funds from Bahamian customers,” it noted, adding: 

“In any event, the Commission does not condone the preferential treatment of any investor or client of FTX Digital Markets Ltd. or otherwise.”

The latest statement from the SCB comes only days after the securities regulator froze FTX’s assets on Nov. 10 and suspended FTX’s registration in the country. 

The SCB has also stripped the powers from the directors of the FTX and said it determined the “prudent course of action” was to put FTX into a provisional liquidation “to preserve assets and stabilize the company.”

According to the statement, the Bahamian Supreme Court appointed a provisional liquidator and said, “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.”

Cointelegraph has reached out to FTX for comment but has not received an immediate response. 

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