FTX Local Clients’ Withdrawals During Implosion Is Focus of Bahamas Probe
Bahamas #Bahamas
(Bloomberg) — Bahamian authorities probing FTX’s implosion are digging into what role its former top executives may have played in client withdrawals after the government froze assets on the platform last month, according to people with direct knowledge of the inquiry.
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Regulators and financial-crime police are looking into whether FTX co-founders Sam Bankman-Fried and Gary Wang were involved in the transactions or had advance knowledge of them, the people said. Local authorities have interviewed Bankman-Fried at his residence in Nassau multiple times as part of the probe, said one of the people, who asked not to be identified due to the sensitivity of the review.
The treatment of assets associated with FTX.com amid its collapse is a key flash point for creditors sifting through the wreckage. Bahamian authorities are also scrutinizing the web of relationships between FTX.com, which is registered locally as FTX Digital Markets Ltd., and Bankman-Fried’s trading firm Alameda Research.
Representatives for the Bahamas securities regulator and police declined to comment. A representative for Bankman-Fried declined to comment. Wang didn’t immediately respond to requests for comment.
The Bahamas announced an asset freeze for FTX.com and appointed a provisional liquidator a day before more than 100 other entities declared bankruptcy in the US on Nov. 11.
Read More: FTX.com Assets Frozen by Bahamas as Crisis Engulfs Empire
Despite that move, some withdrawals from the platform by local clients continued, fueling rampant speculation and finger-pointing.
The Bahamian securities regulator went as far as to issue a statement on Nov. 12 saying that it hadn’t authorized withdrawals by Bahamian clients. Such transactions could be voidable and clawed back as part of the bankruptcy proceedings, officials have said.
Meanwhile, following the US bankruptcy filing, which didn’t include the Bahamian unit, authorities in the island country requested FTX.com assets be transferred to wallets controlled by the government “for the benefit of clients and creditors.” Lawyers in charge of restructuring FTX in the US have blasted that move.
Bahamian authorities, like their counterparts in the US, have been probing FTX’s collapse for about a month.
Read More: US Probes FTX Founder for Fraud, Examines Cash Flows to Bahamas
Both Bankman-Fried and Wang have remained in the island nation, said one of the people. Although they haven’t been arrested, they are being monitored by authorities there, the person said.
In multiple press interviews over the past several weeks on the firm’s collapse, Bankman-Fried has said he didn’t intentionally break laws at the helm of FTX.
The Bahamas securities watchdog has visibility into the operations of FTX Digital Markets because it was directly overseen by local regulators, said the person. However, authorities lack the similar information about Alameda and other FTX-linked entities that were registered to do business in the Bahamas, but not regulated as extensively.
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