April 24, 2024

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Bahamas Supreme Court Orders FTX to Cover Custody Costs

Bahamas Supreme Court Orders FTX to Cover Custody Costs

As new developments emerge pertaining to the failed exchange, FTX has continued to take hits from various sides. The latest blow to Sam Bankman-Fried’s crypto empire is an order from the Supreme Court of Bahamas, where the company was based. Likewise, FTX’s impressive roster of ambassadors is now under scrutiny from regulators.

FTX to Cover Asset Custody Costs

FTX is now required to reimburse the Securities Commission as the regulator took custody of the platform’s assets after its bankruptcy filing.

Indeed, on Nov 11, FTX announced that it had commenced chapter 11 bankruptcy proceedings in the District of Delaware. Subsequently, the Securities Commission of the Bahamas called for FTX to move all of its assets to a digital wallet under the regulator’s control. In a later statement, the commission explained that this was due to an order from the Supreme Court.

The goal was to protect the interests of customers and creditors of FTX Digital Markets. Per the Monday ruling, however, the failed crypto company is liable for all fees associated with the wallet address containing its assets. The SCB commented on the court’s judgment in an official statement, noting that reimbursement would only commence on approval from the court.

No payment(s), however, may be made to the Commission without prior approval of the Supreme Court.”

Celebrities Face Scrutiny from Regulators over FTX Crash

The SCB is not the regulatory entity addressing FTX’s historic collapse. US watchdogs, specifically the Texas State Securities Board are also probing into the upended exchange. According to director of enforcement Joe Rotunda, the board is currently investigating promotional deals between celebrities and FTX.US.

Some public figures caught up in the probe include NFL quarterback Tom Brady and NBA point guard Stephen Curry. Notably, the athletes alongside supermodel Gisele Bundchen and FTX ex-CEO Sam Bankman-Fried among others are defendants in a class action lawsuit against the firm. Due to their endorsement of the platform, they are facing allegations that they were part of “FTX’s fraudulent scheme” to exploit investors.

Per the filing, American clients alone suffered damages worth a total of $11B. As such, the board is looking into how much the firm paid these high-profile persons for promotions. They are also examining what disclosures accompanied the endorsements and whether they were readily available to investors.

The promotions do not make the top of the board’s priorities. However, they are still of importance as the regulator probes into the broader FTX crash.

We’re taking a close look at them,” Rotunda noted. 

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