This confiscation was enforced soon after Bankman-Fried's company submitted for Chapter 11 insolvency on the 11th of November. The Security Commission of the Bahamas specified that the assets of FTX were taken away in order to make sure that they do not vanish suddenly.
The Commission established that there was a substantial risk of an abrupt loss of the digital assets possessed by, or in the care of FTXDM, which could be to the detriment of its customers and creditors," the organisation declared in a press announcement.
Therefore, through the use of its regulatory powers, the Commission requested and obtained a Court order to protect the digital assets owned by, or in the guardianship of FTX by transferring them to protected digital wallets exclusively under the authority of the Commission.
On November 12th, the regulator declared it had thus taken the action of commanding the transfer of all digital assets in the custody of FTX worth more than $3.5 billion, according to the market value at the time of the transfer, to digital wallets supervised by the Commission for safety.
The Commission has announced that the digital funds which were sent on the 12th of November 2022 to the digital accounts under their control will be retained by them in the interim, until the Supreme Court commands them to return the assets to the rightful owners. The regulator has also specified that the process of transferring such tokens did not involve the production of any extra tokens.
Nevertheless, while the news is positive for customers and creditors of FTX, it is not guaranteed that they will be able to reclaim their money straight away since the bankruptcy of FTX is managed in the US and is subject to American laws, while the liquidation of the company is being conducted in The Bahamas. The authorities have made it publicly known that the funds of FTX's clients were mixed with those of FTX and its affiliate Alameda Research, a hedge fund that functions as a trading platform for institutional investors. Alameda is also a part of Bankman-Fried's domain.