The collapse of FTX is being examined by the Bahamian authorities

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NASSAU, Bahamas, Nov 13 (Reuters) – The collapse of cryptocurrency exchange FTX is under scrutiny by Bahamian government investigators, who are looking into whether any “criminal misconduct” occurred, Royal Police said on Sunday. of the Bahamas.

FTX filed for bankruptcy on Friday, one of the highest-profile crypto blasts, after traders rushed to withdraw $6 billion from the platform in just 72 hours and rival exchange Binance abandoned a proposed bailout deal.

In a statement on Sunday, the Royal Bahamas Police Force said: “In light of the collapse of FTX globally and the provisional liquidation of FTX Digital Markets Ltd, a team of financial investigators from the Financial Crimes Investigation Branch are working on working closely with the Bahamas Securities Commission to investigate whether any criminal conduct occurred.”

FTX did not respond to Reuters request for comment.

FTX’s new chief executive, John J. Ray III, a turnaround expert who took over after the bankruptcy filing, said Saturday that the company was working with law enforcement and regulators to mitigate the problem and that it was making “every effort to secure all assets.” , wherever you are.”

The exchange’s dramatic fall from grace has seen its 30-year-old founder, Sam Bankman-Fried, known for his shorts-and-t-shirt attire, go from the poster child of cryptocurrency hits to the star of cryptocurrency’s biggest crash. the industry.

Bankman-Fried, who lives in the Bahamas, has also been the subject of speculation about his whereabouts and denied rumors on Twitter that he had flown to South America. Asked by Reuters on Saturday if she had flown to Argentina, he replied in a text message: “No.” He told Reuters that he was in the Bahamas.

The turmoil at FTX has led to the disappearance of at least $1 billion in client funds from the platform, sources told Reuters on Friday. Bankman-Fried had transferred $10 billion of client funds to his trading company, Alameda Research, the sources said.

New issues arose on Saturday when FTX’s US General Counsel Ryne Miller said in a Twitter post that the firm’s digital assets were being moved to so-called cold storage “to mitigate damage from observing unauthorized transactions.”

Cold storage refers to crypto wallets that are not connected to the internet to protect against hackers.

Blockchain analytics firm Nansen said on Saturday that it saw $659 million in outflows from FTX International and FTX US in the previous 24 hours.

Crypto exchange Kraken said on Twitter on Sunday that it froze the accounts of FTX, Alameda Research and their executives to “protect their creditors.”

The exchange did not immediately respond to a request for comment about the holdings of those accounts.

In its bankruptcy petition, FTX Trading said it has $10 billion to $50 billion in assets, $10 billion to $50 billion in liabilities, and more than 100,000 creditors.

A document that Bankman-Fried shared with investors on Thursday and was reviewed by Reuters showed that FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to a cash crunch that ended with the company filing for bankruptcy.

The collapse shocked investors and sparked fresh calls to regulate the crypto asset sector, which has seen losses racked up this year as crypto prices crashed.

Bitcoin dipped below $16,000 for the first time since 2020 on Wednesday, after Binance abandoned its bailout deal for FTX.

It was trading around $16,400 on Sunday, a drop of more than 75% from the all-time high of $69,000 it hit in November of last year.

Information from Jasper Wade in the Bahamas; Additional reporting by Maria Ponnezhath and Jyoti Narayan in Bengaluru and Rodrigo Campos in New York; Written by Megan Davies; Edited by Daniel Wallis

Our standards: the Thomson Reuters Trust Principles.

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