Bahamas Attorney General and Minister of Legal Affairs Ryan Pinder said it was "extremely regrettable" that FTX's new CEO John Ray III "misrepresented the timely action taken by the Securities Commission and used inaccurate allegations," while also defending the steps taken by the country's regulators in the aftermath of the exchange's collapse.
Pinder spoke Sunday night during a national address over Facebook Live, where he urged all international authorities to "exercise at least the same amount of prudence and restraint in their public commentary as we do so as not to prejudice any of the proceedings that are ongoing."
Tension has been heating up
Tension has been building between authorities in the Bahamas and FTX’s new management, with the Securities Commission of the Bahamas (SCB) stating this week that FTX's new CEO John Ray III made "intemperate and inaccurate allegations" about its treatment of FTX.
After freezing FTX assets, the SCB said it seized FTX Digital Markets' assets on Nov. 12 and transferred all its assets to a digital wallet under its control. FTX Digital Markets is the Bahamas-based subsidiary of FTX Trading.
In his speech, Pinder emphasized that "the speed of which the Securities Commission was able to move was remarkable by any standard."
"Placing FTX Digital Markets in provisional liquidation was not sufficient to protect the customers and creditors of the company," he said. "Therefore (...) the Securities Commission secured the assets of FTX Digital Markets to be held on behalf of and for the benefit and restitution of clients and creditors of FTX."
FTX had said it had “credible evidence that the Bahamian government is responsible for directing unauthorized access to the Debtors’ systems for the purpose of obtaining digital assets of the Debtors" in a filing calling for one of the existing FTX bankruptcy cases in Delaware to be transferred to New York — which court-appointed liquidators for FTX in the Bahamas agreed to this week.
FTX and Alameda Research filed for Chapter 11 bankruptcy protection in a Delaware court on Nov. 11. Then on Nov. 15, FTX Digital Markets filed for Chapter 15 bankruptcy in New York, with FTX's lawyers calling the move "a blatant attempt to avoid the supervision of this Court and to keep FTX DM isolated from the administration of the rest of the Debtors, which constitute the vast majority of the remainder of the FTX group," in a filing.
They also said former CEO Sam Bankman-Fried was trying to undermine the U.S. Chapter 11 case by tying assets up in the Bahamas.
AG defends the Bahamas
Pinder said the investigation of FTX by the country's authorities is still in the early stages and that "ill-informed speculation" isn't helpful.
"Any attempt to lay the entirety of this debacle at the feet of the Bahamas because FTX is headquartered here would be a gross oversimplification of reality," he said. "It is deeply misguided to conclude that reluctance to communicate the details of an active investigation means that nothing is happening."
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.