Bahamas regulator fires back in ongoing feud with new FTX leadership

Quick Take

  • The Securities Commission of The Bahamas again fired back at FTX’s new management in an ongoing feud over its handling of the crypto exchange’s collapse.
  • The regulator said John Ray III’s latest statements on its actions were “unfounded” and based on incomplete information.

Heated exchanges between authorities in The Bahamas and FTX’s new management have spilled over into the new year.

The Securities Commission of The Bahamas (SCB) released a statement late on Jan. 2 seeking to correct “material misstatements” by John Ray III, who was appointed CEO of FTX following founder Sam Bankman-Fried’s resignation in November.

Bankman-Fried was arrested in The Bahamas on Dec. 12 and faces charges from the U.S. Securities and Exchange Commission that he orchestrated a scheme to defraud equity investors in FTX Trading Ltd. 

In its statement, the SCB took umbrage with three points in particular: Ray’s statements challenging its calculation of the value of the digital assets transferred into its custody on Nov. 12; Ray’s allegations that the regulator instructed FTX to mint $300 million in new FTT tokens; and statements suggesting that FTX assets held by the SCB were stolen.

The SCB said in its statement that the challenge to its calculations was based on incomplete information, that claims it instructed FTT minting were “unfounded,” and that allegations of theft were made “without providing any substantiated basis for such claims.”

“The US Debtors’ continued lack of diligence when making public statement concerning the Commission is disappointing, and reflects a cavalier attitude towards the truth and towards The Bahamas that has been displayed by the current officers of the Chapter 11 Debtors from the date of their appointment by Sam Bankman-Fried,” the SCB said.

War of words

The statement continues a feud that has raged ever since FTX filed for bankruptcy protection in mid-November. In an earlier filing, FTX’s new management claimed 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.”

On Dec. 30, the SCB revealed that it has held more than $3.5 billion in FTX customer assets since Nov. 12. Later that day, FTX trading and its affiliated debtors said they would seek the return of that crypto to their Chapter 11 estates for the benefit of creditors — and alleged that the funds had been transferred after bankruptcy proceedings had started. 

“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,” the group said in the Dec. 30 statement.

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.

© 2023 The Block Crypto, Inc. 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.