Bahamas officials are looking into the FTX collapse

Bahamas authorities are investigating the demise of the FTX cryptocurrency exchange to see if any “criminal behavior” happened, the Royal Bahamas Police announced on Sunday.

One of the most publicized crypto blowups, FTX, filed for bankruptcy on Friday after traders evacuated $6 billion from the site within 72 hours and rival exchange Binance backed out of a rescue arrangement.

The Royal Bahamas Police said

Following the “global collapse of FTX” and “the provisional liquidation of FTX Digital Markets Ltd,” the Royal Bahamas Police said in a statement on Sunday that “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.”

CEO John J. Ray III, a restructuring expert who took over after FTX filed for bankruptcy, said on Saturday that the business was collaborating with authorities and regulators to address the situation and was making “every effort to secure all assets, wherever they are found.”

Sam Bankman-Fried, the exchange’s 30-year-old founder and a celebrity for his penchant for shorts and T-shirts, has gone from being the face of cryptocurrency’s success stories to the villain of the industry’s largest meltdown.

Bankman-Fried, a Bahamian resident, has also been the subject of suspicions regarding his location; he has, via Twitter, dispelled conjecture that he has traveled to South America. After Reuters inquired about his whereabouts on Saturday, he texted back, “Nope,” meaning he had not traveled to Argentina via plane. He reportedly informed Reuters that he was now in the Bahamas.

At least $1 billion in customer cash has vanished from the FTX platform, according to sources quoted by Reuters on Friday. It was reported that Bankman-Fried had moved $10 billion in customer cash to his trading company, Alameda Research.

When FTX’s U.S. general counsel Ryne Miller tweeted on Saturday that the company was putting its digital assets in cold storage “to limit damage upon seeing unlawful activities,” fresh complications arose.

Cold storage is a way to protect crypto wallets from hackers by not connecting them to the internet.

On Saturday, Nansen, a blockchain analytics company, reported $659 million in withdrawals from FTX International and FTX U.S. in the previous 24 hours.

Kraken, a cryptocurrency exchange, announced on Twitter on Sunday that it had frozen the accounts of FTX, Alameda Research, and their management in order to “protect its creditors.”

A request for comment from the exchange regarding the contents of the accounts went unanswered for some time.

FTX Trading claimed more than 100,000 creditors, $10–50 billion in assets, and $10–50 billion in liabilities in its bankruptcy case.

Bankman-Fried sent investors a paper on Thursday that stated FTX owed creditors $13.86 billion and had $14.6 billion in assets. Only $900 million of the total assets were readily available for use, creating the liquidity pressure that ultimately led to the bankruptcy declaration.

The collapse stunned investors and sparked calls to regulate the cryptoasset sector, which has sustained losses this year.

Following Binance’s decision to pull out of its rescue arrangement for FTX on Wednesday, the price of bitcoin dropped below $16,000 for the first time since 2020.

From its record high of $69,00 in November last year, it has dropped by more than 75% to its Sunday trading price of roughly $16,400.

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