After ordering the FTX hack, the Bahamian agency is now one of the biggest holders of ETH in the world.
Bahamian government orders FTX ‘hack’
Bahamian authorities have ordered Sam Bankman-Fried, who was previously the main figurehead of the crashing FTX exchange, to transfer hundreds of millions of dollars worth of cryptocurrencies from FTX to a wallet controlled by the Bahamas Securities Commission.
The Commission confirmed that it ordered the transfer in Thursday press release. In this press release, the Commission stated that the November 12 officials”took the initiative to order the transfer of all digital assets of the company [FTX] to a Commission-controlled digital wallet for safekeeping“. The note adds that FTX was ordered to move the assets”to protect the interests of customers and creditors.“
FTX filed for Chapter 11 bankruptcy on Nov. 11 after suffering a bank run and liquidity crunch that rocked the entire crypto ecosystem. After a freeze on client withdrawals, it emerged the exchange had a $9.4 billion hole in its balance sheet after lending client funds to Alameda Research, a trading firm co-founded by Bankman-Fried.
A Nov. 17 filing from FTX argued that the Bahamian government had obtained a “unauthorized accessto FTX’s systems by directing Bankman-Fried to transfer the funds.
FTX was the victim of an alleged “hack” on November 12, in which digital assets worth over $600 million were moved to external FTX wallets. US General Counsel Ryne Miller has confirmed that some assets had been moved to cold storage. “in order to limit the damage ” following the incident.
FTX Accounts Drainer (0x59AB…32b) has conducted multiple swap and cross-chain operations for the past day and currently holds ~$338,598,702 of assets.
The majority of the funds are held in the
Current balance: pic.twitter.com/SMrkbcwULL
—Beosin Alert (@BeosinAlert) November 15, 2022
Once the assets were transferred, they were exchanged for ETH. Blockchain security company Beosin valued that the Bahamas authority holds over $330 million, making it the 35th largest whale in Ethereum. Most funds are currently held in this Ethereum wallet.
Whether the Commission reacted appropriately is up to the court to decide, but the announcement has sparked controversy within the crypto community.
The FTX filing added that “the automatic reprieve was flouted, by a government actor, no less.”Under U.S. bankruptcy law, the automatic stay provided by Chapter 11 is “a period of time during which all judgments, collection activities, seizures and repossessions of property are suspended“. Given that the funds were transferred just hours after the Chapter 11 filing, it appears that the Commission and FTX overlooked this rule.