FTX Ordered to Transfer Digital Assets to Bahamas Government Wallets, Potential Jurisdictional Fight Emerges

The Securities Commission of The Bahamas (SCB), the financial market regulator of the Bahamas, has ordered the beleaguered cryptocurrency exchange FTX to transfer its digital assets to government-controlled wallets for "safekeeping".

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"On 12 November 2022, the Securities Commission of The Bahamas ("the Commission"), in the exercise of its powers as regulator acting under the authority of an Order made by the Supreme Court of The Bahamas, took the action of directing the transfer of all digital assets of FTX Digital Markets Ltd. (FDM) to a digital wallet controlled by the Commission, for safekeeping," the commission stated.

The commission added that it has the authority to apply for a judicial order to protect the interests of clients or customers of a registrant of the Commission under the Digital Assets and Registered Exchanges Act, 2020 ("DARE Act").

In addition, SCB noted that "it is not the understanding of the Commission that FDM is a party to the US Chapter 11 Bankruptcy proceedings", which implied a potential jurisdictional fight between the U.S. and the Bahamas. FTX Digital Markets filed for chapter 15 bankruptcy in the U.S. on Nov. 15, days after most of the rest of the FTX group filed for chapter 11 bankruptcy​.