The now-bankrupt crypto exchange FTX operated by Sam Bankman Fried is the subject of an investigation by the Royal Bahamas Police Force on potential criminal activity.
A group from the jurisdiction’s Financial Crimes Investigation Branch is “working closely” with the Bahamas Securities Commission to ascertain whether any criminal behavior took place, according to an official announcement.
FTX might have engaged in ‘potentially unlawful’ conduct in Bahamas
The commission has previously stated that it is “aware of public statements suggesting that (FTX) clients’ assets were mishandled, mismanaged, and/or transferred to Alameda Research,” which would be “potentially unlawful.” It is unclear what specific potential crimes the commission is looking into.
The registration of FTX was revoked by the Bahamas Securities Commission on Thursday, and assets connected to the exchange were also ordered to be frozen.
Liquidity crisis
Binance temporarily attempted to acquire FTX last week in order to “help cover the liquidity crunch,” but the agreement was later canceled owing to due diligence and “news reports regarding mishandled customer funds and alleged US agency investigations,” clearing the way for FTX to declare bankruptcy.
Bankman-Fried resigned as CEO of FTX last week, and the company, along with over 100 affiliated entities, filed for Chapter 11 bankruptcy in the aftermath of a liquidity crisis that resulted in the collapse of one of the world’s biggest crypto exchanges.