As his company was being put into liquidation in The Bahamas and before he filed for Chapter 11 bankruptcy protection in the US, former FTX CEO Sam Bankman-Fried said he decided to prioritize Bahamian withdrawals from his cryptocurrency exchange because “you do not want to be in the country with a lot of angry people in it”.
However, FTX previously tweeted that it did it per Bahamian regulators.
In an interview after the move, which caused a massive uproar, he admitted he had no such permission.
FTX suspended international withdrawals on November 10, the same day all of its assets in The Bahamas were frozen by the Securities Commission of The Bahamas and a provisional liquidator was appointed by the Supreme Court.
Later that day, FTX tweeted that, with the permission of Bahamian regulators, it would facilitate the withdrawal of Bahamian funds.
In a November 16 interview with Tiffany Fong, a YouTube personality, Bankman-Fried said, “I gave them (SCB) a heads up, a one day heads up, that we were going to do it.
“They didn’t say yes or no. They didn’t respond and then we did it.
“The reason I did it was it was critical to the exchange being able to have a future because that’s where I am right now and you do not want to be in the country with a lot of angry people in it.
“You do not want your company to be incorporated in a country with a lot of angry people in it.
“So, it was realistically speaking, sh***y; but the pathway forward for FTX involved Bahamians not being pissed with it.”
On November 10, FTX tweeted, “Per our Bahamian HQ’s regulation and regulators, we have begun to facilitate withdrawals of Bahamian funds. As such, you may have seen some withdrawals processed by FTX recently, as we complied with regulators.
“The amounts withdrawn comprise a small fraction of the assets we currently hold on hand and we are actively working on additional routes to enable withdrawals for the rest of our database. We are also actively investigating what we can and should do across the world.”
The SCB fired back saying it never gave FTX any authorization for withdrawals.
“The commission wishes to advise that it has not directed, authorized or suggested to FTX Digital Markets Ltd. the prioritization of withdrawals for Bahamian clients,” it said.
“The commission further notes that such transactions may be characterized as voidable preferences under the insolvency regime and consequently, result in clawing back funds from Bahamian customers.
“In any event, the commission does not condone the preferential treatment of any investor or client of FTX Digital Markets Ltd. or otherwise.”
Shortly after FTX’s November 10th tweet, panicked FTX users took to Twitter and any other avenue they could to convince Bahamian users to facilitate the withdrawal of their funds.
One user on Twitter said, “Any FTX employees willing to change my account’s country of residence to Bahamas to facilitate withdrawal I am offering $1 million and unlimited legal fees. DM me (serious inquires only).”
At 4:30 a.m. on November 11, Bankman-Fried filed for Chapter 11 bankruptcy protection and resigned as CEO. He told Fong, as he has said before, that wishes he did not.
The company collapsed following a “run on the bank”.
Binance CEO Changpeng Zhao, who heads the world’s largest crypto exchange, tweeted earlier this month that he was pulling out of FTX due to recent revelations that came to light.
Questions began circulating in early November over whether FTX improperly used customer funds to prop up Alameda Research, a hedge fund owned by Bankman-Fried.
Officials said the impact of Zhao’s announcement was swift and more than $5 billion of withdrawal requests were made to FTX.
FTX was unable to process the requests because it did not have the money.
Officials have said in court documents that there is evidence of fraud and mismanagement at FTX. FTX has over 100 companies in over 20 countries.
It lost between $10 billion and $50 billion, court documents show.
