Posted by The assets of FTX’s Bahamas subsidiary, the second-largest cryptocurrency exchange, have been frozen by the Bahamas securities regulator as the exchange struggles for survival.
The Securities Commission of the Bahamas announced on Thursday that it has appointed a liquidator for the unit and frozen the assets of FTX Digital Markets and related parties.
The commission stated that “the powers of the directors of FDM have been suspended and no assets of FDM, whether client assets or trust assets held by FDM, can be transferred, assigned, or otherwise dealt with without the written approval of the provisional liquidator.”
The decision was made when Sam Bankman-Fried, the founder of FTX, frantically searched for money to fill an estimated $8 billion financial gap in the exchange as customers fled.
According to reports, FTX is being investigated by the Department of Justice and the Securities and Exchange Commission in the US to see whether any crimes or securities offenses have been committed.
Bankman-Fried expressed regret on Thursday, admitting that he had “fucked up” in his calculations and communications during the crisis.
Photo credit: Reuters
The largest cryptocurrency asset, bitcoin, lost 4% of its value on Friday to reach $16,858 with a 17% monthly loss. FTT, FTX’s own token, was down 27% at $2.7 and had lost 89% of its value for the month.
The FTX crisis was triggered last week after it was revealed that a crypto hedge fund, Alameda Research, owned by Bankman Fried, has billions of dollars’ worth of FTT tokens on its balance sheet. This implied that any price fluctuation could put Bankman-Fried’s empire at risk.
According to a statement sent to FTX personnel, customers withdrew $6 billion from the exchange in the 72 hours before Tuesday morning, when the exchange was compelled to halt future redemptions in an effort to stay afloat. Withdrawals have not yet been resumed, new account registrations are being blocked, and existing clients are being warned about making deposits through FTX.
When the biggest cryptocurrency exchange, Binance, declared on Sunday that it would sell its holdings in FTT, amounting to roughly $500 million, citing “recent revelations,” the Alameda reports turned into a catastrophe for FTX. Following a sharp decline in the value of FTT below the $22 floor that FTX had agreed to sustain, users attempted to withdraw their assets more quickly than the exchange could handle them, which caused the crypto equivalent of a bank run.
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