The Securities Commission of the Bahamas (SCB), the security regulator of the country, announced on Thursday that it had frozen assets of FTX Digital Markets, a subsidiary of the cryptocurrency exchange FTX.
According to Bloomberg, there have been more signs that the empire of crypto mogul Sam Bankman-Fried is already teetering.
In addition to freezing the asset, the regulator also suspended its registration. Likewise, as an initial step to assess whether the company is sound or should be liquidated, an attorney was appointed as provisional liquidator.
SCB Says Freezing FTX Digital Markets Assets is Need to Stabilize the Company
In a statement given on Thursday, the security regulator said that its decision to freeze FTX Digital Markets assets was "the prudent course of action."
The directors of FTX were now stripped of powers, according to the SCB. Likewise, the regulator said that it is necessary to put FTX into provisional liquidation in order "to preserve its assets and stabilize the company," as per Cointelegraph.
According to the Bahamian Supreme Court, assets of FDM, trust assets, and client assets cannot be transferred, assigned, or otherwise dealt with, unless there is written approval from the provisional liquidator.
The SCB said that it was aware of the circulating public statements that suggest that the assets of the clients were mismanaged, mishandled, and/or transferred to Alameda Research.
FTX CEO Bankman-Fried founded Alameda, a trading firm. There was a leaked balance sheet from the firm that showed it held large amounts of the FTX exchanges' native token, and FTX Token.
There were rumors circulating that Alameda was funding trades using FTX user funds. Accordingly, it led to a "bank-run" on FTX which caused a liquidity crisis for the exchange.
According to the SCB, they will work with the court's appointed liquidator in order to be able to obtain the best possible result for the customers as well as for other stakeholders of FTX.
Cointelegraph says they have contacted FTX and the SCB for comment. However, as of writing, both haven't issued an immediate response yet.
Read Also: Reddit, FTX Partnership Allows Redditors to Buy Crypto on the Platform
US SEC Investigates FTX CEO for Possible Violations of Securities Rules
According to Bloomberg, Bankman-Fried made an announcement that he decided to shut down Alameda Research.
The US Securities and Exchange Commission (SEC) is investigating the FTX CEO for possible violations of securities rules.
In the US, the crisis with FTX has also got the attention of the regulators. Maxine Waters, the House of Representatives Financial Services Committee chair, is now pushing for greater consumer protection.
Likewise, Waters wants more federal oversight of cryptocurrency trading platforms.
In addition, US President Joe Biden is aware of the current crypto market situation, according to the White House.
White House Press Secretary Karine Jean-Pierre has alluded to the liquidity crisis of FTX to highlight why cautious regulation of cryptocurrencies is needed.
FTX Digital Markets is the subsidiary of FTX Trading in the Bahamas. It is operating as FTX.com. The unit is a separate legal entity from FTX US.
According to a statement last year, the unit provided assistance to affiliates by offering derivatives, options, and other products and services to customers.
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