Written by 10:55 pm Cryptocurrency

FTX Debtors Provide Information Concerning Bahamas Crypto Seizure

WILMINGTON, Del., Dec. 30, 2022 /PRNewswire/ — FTX Trading Ltd. (d.b.a. FTX.com), and its affiliated debtors (together, the “FTX Debtors”), today provided information on the cryptocurrency of the FTX Debtors in the control of the Securities Commission of The Bahamas (the “Bahamas Commission”).

On November 12, 2022, after the commencement of the chapter 11 cases of the FTX Debtors, cryptocurrency of the FTX Debtors was transferred without their authorization, including approximately 195 million FTT, 1,938 ETH and other miscellaneous coins that do not have substantial value. Blockchain information shows this cryptocurrency currently resides in a single digital wallet at Fireblocks. 

Based on evidence in the possession of the FTX Debtors, on November 12, 2022, the Bahamas Commission instructed Mr. Bankman-Fried and Mr. Wang to transfer digital assets to a Fireblocks wallet. The Bahamas Commission has acknowledged that it orchestrated these transfers, and retains the digital assets in a single digital wallet at Fireblocks, consistent with what is shown on the blockchain. 

The value of the cryptocurrency in this Fireblocks wallet at spot prices at the time of transfer was approximately $296 million, according to etherscan.io, assuming the entire amount of FTT could be sold at spot prices at the time. The value of the same cryptocurrency at spot prices as of 2:00 PM EST on December 30, 2022 was approximately $167 million, on the same assumption. There can be no assurances such a large amount of FTT could be sold at spot prices, or at all.

The Bahamas Commission issued a press release earlier today stating that the cryptocurrency in their custody was worth more than $3.5 billion at the time of transfer. The press release did not identify the type of cryptocurrency seized or the valuation methodology, and the Bahamas Commission has not provided the FTX Debtors any further information to resolve the valuation disparity. The FTX Debtors urge the Bahamas Commission to clear up any confusion created by their recent statements and provide the public with accurate information concerning the cryptocurrency seized and how it was valued for the purposes of these statements.

In addition, the FTX Debtors have informed the Bahamas Commission that none of Mr. Bankman-Fried, Mr. Wang or the Bahamas Commission had a right to take cryptocurrency of the FTX Debtors and that the FTX Debtors will seek the return of the seized cryptocurrency promptly to their chapter 11 estates for the benefit of creditors. The Bahamas Commission regulated only FTX Digital Markets Ltd. (“FTX DM”), a local service company in The Bahamas. FTX DM is not the owner or operator of the FTX.com exchange, or the owner or custodian of the cryptocurrency seized.

More information about the chapter 11 cases of the FTX Debtors is available at https://cases.ra.kroll.com/FTX/.

Advisors

The FTX Debtors are represented by Sullivan & Cromwell LLP as legal counsel and are assisted by Alvarez & Marsal North America, LLC as financial advisor and Perella Weinberg Partners LP as investment banker.

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