The Bahamas financial markets regulator, the Securities Commission of the Bahamas, has admitted to seizing FTX assets valued at $3.5 billion at the time of transfer. The regulator is temporarily holding on to these assets before delivering them later to the creditors and the customers that own them.

Bahamas regulator freezes $3.5 billion in FTX assets

The digital assets frozen by the Bahamas regulator belong to the FTX Bahamas unit. The regulator has said that these assets were transferred to digital wallets controlled by the commission in November after FTX and Alameda Research filed for Chapter 11 bankruptcy in the United States.

After the transfer of these assets to the commission was complete, the founders of FTX, Sam Bankman-Fried, and Gary Wang, could no longer access the tokens as the regulator froze them. The commission’s executive director, Christina Rolle, noted that the assets remained under the sole control of the regulatory body.

Earlier this month, the lawyers representing the FTX exchange opposed a demand seeking access to internal records for its Bahamian operations. The lawyers said they did not trust the Bahamian government with sensitive data, as it could be used to transfer assets from the bankrupt exchange.

The FTX exchange filed for bankruptcy on November 11. The company was headquartered in the Bahamas, and at the time of filing for bankruptcy, it appointed liquidators to support it in winding down the international trading business of the exchange.

The founder and the former CEO of FTX, Sam Bankman-fried, was arrested in the Bahamas after US authorities filed multiple charges against him, such as engaging in wire fraud, securities fraud, and violation of campaign financing rules. Bankman-Fried agreed to extradition to the United States and is set to appear in court again next week after being freed on a $250 million bond.

FTX customers do not want their names made public

After FTX filed for bankruptcy, it was expected that the exchange would reveal its customers’ identities, which is usually the case with companies that file for bankruptcy. FTX customers outside the US requested a US bankruptcy judge to conceal their names during the bankruptcy case, arguing that exposing their identities exposed them to scams.

The customers made a court filing late Wednesday revealing that the bankrupt exchange owes them $1.9 billion. They warned that if their identities are disclosed, it could undermine the exchange’s efforts to sell a part of its business, which is currently the plan in a bid to make more money available for the creditors.

The customers also said that the FTX bankruptcy case was different because of the many theft and fraud cases in the crypt sector. Moreover, there were few security safeguards in the crypto space. The FTX bankruptcy estate has also lodged a request to keep the names of its customers a secret during the bankruptcy proceedings. The FTX bankruptcy is overseen by the exchange’s new CEO, John Jay Ray.