After ordering the FTX hack, the Bahamas agency is now one of the largest ETH holders in the world.
Bahamas government orders FTX hack
Bahamian authorities have ordered Sam Bankman-Fried, who was previously the main figurehead of the collapsed FTX exchange, to transfer hundreds of millions of dollars of crypto-currencies from FTX to a portfolio controlled by the Bahamas Securities Commission.
The Commission confirmed that it ordered the transfer in a press release on Thursday. In that release, the Commission stated that the November 12 the civil servants “took the initiative to order the transfer of all digital assets of the company [FTX] to a digital wallet controlled by the Commission, for safekeeping“. The memo adds that FTX was directed 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 crisis that rocked the entire crypto ecosystem. After a freeze on customer withdrawals, it emerged that the exchange had a $9.4 billion hole in its balance sheet after lending customer funds to Alameda Research, a trading firm co-founded by Bankman-Fried.
A November 17 filing by FTX argued that the Bahamian government had obtained a “unauthorized access“to FTX’s systems by directing Bankman-Fried to transfer the funds.
FTX was the victim of an alleged “hack” on Nov. 12, in which more than $600 million worth of digital assets were moved to external FTX wallets.US General Counsel Ryne Miller confirmed that some assets had been moved to cold storage. “in order to limit the damage ” as a result of 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. The blockchain security company Beosin estimates that the Bahamas authority holds more than $330 million, making it the 35th largest whale in Ethereum. Most of the funds are currently held in this Ethereum portfolio.
Whether the Commission responded appropriately is for the court to decide, but the announcement has sparked controversy in the cryptographic community.
The FTX filing added that “the automatic stay has been 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, foreclosures and repossessions are suspended“. Given that the funds were transferred only hours after the Chapter 11 filing, it appears that the Commission and FTX overlooked this rule.