FTX May Need To Claw Back $100M From 1,500 Bahamian FTX Accounts

Bahamians were able to withdraw funds from their FTX accounts during a window of about 25 hours between Nov. 10 and 11

article-image

Tatohra/Shutterstock.com modified by Blockworks

share

FTX’s granting of a peculiar withdrawal window for Bahamian accounts while the rest of the world was locked out has attracted the attention of the US Congress.

Veteran insolvency expert John Ray, who took over as CEO to handle the exchange’s restructuring, testified during a Congressional committee meeting on Tuesday on FTX’s absence of record keeping and the status of the recovery of funds. 

Ray revealed that FTX’s restructuring team has so far secured more than $1 billion in assets. However, when US Rep. William Timmons asked about money withdrawn from the exchange by Bahamian citizens, Ray didn’t offer as many details. 

But Timmons revealed that Congress has a list of 1,500 Bahamians who took advantage of a window of about 25 hours between Nov. 10 and 11 to pull funds. FTX is headquartered in the Bahamas, where many key employees lived, including Bankman-Fried and Alameda Research CEO Caroline Ellison.

Loading Tweet..

FTX.com had paused withdrawals for the rest of the world at the time, a move Bankman-Fried claimed local regulators had requested (they later denied that was the case).

Some non-Bahamian residents, desperate to retrieve their frozen assets, ended up finding a loophole to do so via FTX’s NFT platform, which was left online. Bahamian residents were said to be listing very expensive — but otherwise unremarkable — NFTs, which stranded users would buy with their full balances. 

This allowed local accounts to withdraw the cash in full on their behalf. Blockworks reported at the time that the NFTs that sold for inflated prices added up $50 million in volume on the marketplace using this scheme.

The total amount allegedly taken out from Bahamian accounts is $100 million, according to Timmons, who asked Ray, “You plan on going after that money, correct?”

“We’ll investigate every potential course of action,” Ray answered. It’s still unclear how much of the funds were withdrawn by actual Bahamian residents.

When pressed on the matter again, Ray said that they will “certainly pursue every course of action to recover” the funds.


Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.


Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.


Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.


Tags

upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

Solana Q2 Update

Research

While most alternative Layer 1 networks, have seen lackluster usage since the market downturn, Solana has continued to show significant potential throughout 2023.

/

article-image

Moody’s changed Coinbase’s outlook because of uncertainty about how the SEC charges will affect the business and money flow

article-image

The exchange warned customers to withdraw USD funds by June 13

article-image

The launch of ‘The Amory’ will provide gamers the chance to earn rewards through borrowed assets

article-image

Industry exec suggests that Web3 companies seek advice from counsel and invest in compliance teams as latest SEC actions highlight ongoing securities questions

article-image

The tentative agreement would result in BitGo purchasing Prime Trust outright, the company said on Thursday

article-image

Google found that in 65% of cases involving compromised cloud accounts, hackers were engaging in crypto mining