According to a local financial regulator, cryptocurrency exchange FTX was not required to permit Bahamas-based users to withdraw their money.
In a statement posted on Twitter on Saturday, the Securities Commission of the Bahamas (SCB) claimed that a recent tweet by FTX acknowledging that Bahamian customers could withdraw money at the regulator’s urging was false.
On Thursday, FTX tweeted that it has “started to assist withdrawals of Bahamian monies” in accordance with the rules and regulations of its Bahamian headquarters.
1) Per our Bahamian HQ's regulation and regulators, we have begun to facilitate withdrawals of Bahamian funds. As such, you may have seen some withdrawals processed by FTX recently as we complied with the regulators.
— FTX (@FTX_Official) November 10, 2022
In its statement on Saturday, SCB stated that it had not “advised, sanctioned or indicated to FTX Digital Markets” that it give Bahamian users priority when making withdrawals.
According to the insolvency regime, “The Commission further observes that such transactions may be considered as voidable preferences and hence result in clawing back monies from Bahamian clients.” The Commission “in any event does not condone the preferential treatment of any investor or client of FTX Digital Markets Ltd. or otherwise.”
Late on Thursday, SCB froze FTX’s assets in the Bahamas, albeit the exchange had already stopped withdrawals a few days earlier.
Despite this stoppage, some users were nevertheless able to withdraw various cryptocurrencies totaling close to $7 million in a short period of time on Thursday morning, according to Nansen data.
According to CNBC, a number of FTX users from outside the Bahamas also appeared to attempt to withdraw money with the aid of local users. The Bahamas-based users sold the foreign users high-valued NFTs, presumably with the understanding that the Bahamas-based users would be permitted to withdraw and retain a portion of the locked-up cash.
Days after an agreement for Binance to acquire the exchange fell through, FTX filed for bankruptcy on Friday.
Although FTX later announced it was able to redirect some of its cash back to cold storage wallets, the exchange was reportedly compromised for $600 million late Friday, adding to the pandemonium.
John Ray III, the exchange’s new CEO, declared that the business was collaborating with law enforcement.
