Yeah, the ftx coins were moved to two addresses. One is the one most folks were watching, where most of the non-eth funds were sold to eth on decentralized exchanges, and sometimes at really high slippage. The stable coins were all converted to DAI, which doesn't have any blacklist feature. This address is also a basic private key wallet, like metamask, not a multisig or contract wallet. None of this sounds like a regulator doing the bare minimum to preserve a company's assets for future bankruptcy liquidation.
The other address that recieved substantial funds is a contract based multisig wallet, and it recieved everything that is truely a shitcoin. And that wallet hasn't sold or moved anything beyond the initial movement. On the night of the hack there was speculation that this was a whitehat rescue of the remaining tokens.
To me this sounds more like there was both a hack, and a seizure to preserve what was left.
Maybe this is a stupid question, but how? Was the Bahamas' SEC holding its own copies of FTX's keys? I thought the entire point of these schemes was that this kind of seizure-by-force wasn't possible (absent exploits or insiders).
According to the article, they legally compelled SBF to provide access (he is AFAIK physically located there)
> the U.S.-based bankruptcy administrators […] had “credible evidence” that officials in the Bahamas had directed FTX founder Sam Bankman-Fried to access FTX’s systems after the Chapter 11 filing, “for the purpose of obtaining digital assets of the debtors.”
The article seems to hint that the Delaware bankruptcy case might be complicated by the Bahamian regulator's New York bankruptcy case. It looks like they're implying collusion beteen SBF and the Bahamian regulator.
I have to say I find the idea of a "Bahamian regulator" amusing, or at least ironic. People don't put their wealth and companies in the Bahamas because of their reputation for excellent regulation.
But they might if, apart from turning a blind eye to many things, the same regulator might be prevailed on to collude in seizing/preventing other seizure of their assets (by less favorable jurisdictions), for uh "safekeeping" under Bahamian 'justice'... of course.
Something I've been thinking about WRT SBF and online ethics, is if someone's true devotion is to preserving shareholder value, etc, if you know "interesting things" have happened and been covered up for a long time, lying on twitter to people who mostly are uninvolved and don't care, might be seen as a legal obligation, not a character flaw.
He had an "out" which was the companies business model was to purchase regulations from politicians intended to put all his competitors out of business, that process seemed to be going VERY well, and if he could have held out another half year, maybe two years... he likely would have been very successful. So he is legally obligated as an officer of his company to lie on twitter to keep the charade running long enough to pay off for the investors.
Certainly his investors would have made more money if he hadn't gotten caught than how it turned out, and being a criminal organization he can't be honest about that on Twitter.
There is no reason to believe FTX was going to succeed via regulatory capture. SBF wasn’t a rational thinker. The establishment sucks but it doesn’t mean SBF was competent and had a realistic out. He didn’t. He is an out of control sociopath.
That "interview" that he's been trying to walk back ever since, seems more like the work of a sociopath attempting to change the public narrative. Instead of people talking about all the fraud, he's hoping they'll be arguing about if he's actually woke or fake woke.
Presumably Bahamian law enforcement officials in possession of the court order offered the persons in possession of the keys the choice between making the transfer or going to Bahamian prison for contempt.
Ultimately, if you foul things up enough in whatever jurisdiction you happen to be physically located in, men with guns will come to compell you to do something.
I've lost count how many times I've seen self-professed crypto fundamentalists say they'd never, ever give out their keys during duress - that they'd rather die than hand over anything. (Usually in the context of some person getting kidnapped and giving their keys to their captors, has happened quite a few times around the world)
> There is no crypto scheme, no algorithm, no possible arrangement of private keys and Merkle trees that can escape the reality of men with guns.
On the contrary. It's the only case where maths can defend vs men with guns.
Multi sig schemes spread over different people over several continents make the "men with guns" thing very difficult. Or multisig but m-out-of-n, with a dead beat: if after x weeks you don't hear of person A, person B and C move the coins to a new sig where person A isn't involved anymore.
There are also a shitloads of things you can do with smart contracts. For example you can have a smart contract where if person A's private key doesn't sign anything for more than x weeks ("blocks"), the funds are destroyed.
There also the whole plausible deniability thing: where it's impossible to know where a hardware unlocked with a hardware wallet is the real thing or not.
$5 wrench attack, here's my real password: take the 50 millions. Oops. Decoy. On the other password there's $2bn.
"We have a seizure warrant for your cryptocurrency."
"Ho ho! Good luck, gentlemen! For, you see, I've implemented a multi-signature scheme spread over different people across several continents which requires-"
(Lol. Sorry for the empty comment, but this FTX situation is just a comedy gift that keeps on giving. I imagine in 5 years we’ll still be discovering new things to find funny about it.)
Ten years ago when my crypto was worth barely anything I had an airgapped, full disk encrypted, RasPi which required a Shamir's Secret Sharing key arrangement to unlock as my cold storage... just because it was something fun to setup.
Here a multi-billion dollar enterprise has less sophisticated OpSec. Just... wow.
It was run by a dude who plays League of Legends on conference calls and openly encourages his employees to take amphetamines to increase their job performance.
That is weird. If you're going to make League of Legends such a big part of your public image, you'd think you'd put at least a little bit of effort into it.
I fear if Bad Guys want money and you tell them something like, "you can't get it, it's on multisig wallets with geographically distributed individuals in control", that's still a You problem and you've only bought yourself a little time before they come back to collect, and/or break your legs if they can't collect.
I may have to file this one under, "everyone wants to be a gangster until it's time to do gangster things"
It solves the problem, that the money is protected (in the same way that I assume something like "manual multisig", which I assume exists, solves the problem in traditional banking).
Nothing can solve the problem of protecting you from "bad men" who want to hurt you and don’t care about anything else.
"You can beat me all day, but it's impossible for me to fulfill your demands, you'd also need to beat these other four people, and they're located all over the globe."
Someone might be quite happy to engage squads in lots of countries to kidnap and beat everyone if the payout is billions of dollars, but it's a very different problem and e.g. the Bahamas government or some local thug won't be able to do it. I have no idea how large a cartel would need to be to have reliable operatives on the ground in lots of countries, and I'd assume if you're part of a group holding the keys to those amounts of cash, you're going into lockdown when two of your associates suddenly vanish.
Sure, but that's a tall order. The US cooperating with e.g. China, Russia and the EU to get everyone? Or the US running covert ops in China, Russia and the EU to take the money themselves? Both are a very different situation than the US simply sending a cop to some address and asking the person living there to please come with them to the station.
For criminals, it'll also be a huge operation, and it'll come with insane publicity which criminals typically don't like. Who's powerful enough and willing to potentially burn their existence in entire countries for such a payout, when they make billions a year?
There might be a sweet spot where the payoff is large but the notority is low (think about one criminal organization going after the other).
Unless there are street fights, people will not care that much.
Or perhaps political opponents in unstable countries.
On the government side the USs reach is far and criminals are not always willing (or able) to go beyond it. Maybe coordinating with China won't happen, but let's say Japan, mexico and 2 EU countries is not out of the ordinary.
There are busts happening almost every year on that scale
Sometimes the men with guns are also distributed across multiple continents, and the only way to protect yourself from them entails making a deal with other men with guns.
If you’re part of a multi signature scheme and you’re hiding from US authorities in, I dunno, China or Russia or Pakistan or Afghanistan or Iran, there’s (a) not much stopping Uncle Sam’s boys from sneaking up on you anyway if they’re sufficiently motivated and (b) some local men with guns whom you might need to deal with as well.
In reality it’s probably not worth it for the US to track you down to the ends of the earth and/or get the CIA involved if you’re just trying to sneak some ill-gotten money out of the country, and it’s a lot easier for one of your multi-signature holders not to get caught than for the authorities to simultaneously catch up with a quorum. And maybe your group includes some people who really don’t mind living the rest of their lives in these types of places.
But for those of you who live within the greater American empire, the price you pay for keeping that money out of Uncle Sam’s hands is going to include keeping it out of your hands and also you go to prison if you ever get caught. Which is probably a bad deal unless you’re a drug cartel or some other group that’s already sort of priced in that outcome.
> $5 wrench attack, here's my real password: take the 50 millions. Oops. Decoy. On the other password there's $2bn.
Somehow I don't see state actors falling for that, especially when they have a rough idea of the actual numbers involved, based on the shitton of angry people, some of which are very rich and very well connected, clamouring about it.
It's a solved problem, and has been since the first bitcoin paper. That no one read that and just heard "magic internet gold I can get rich from" is their problem and not mine.
You don't get rich quick off the bitcoin protocol however so we have people run places like FTX: centralize and get the big bucks because they provide convenience. Then act surprised when it goes tits up like every other centralized system.
Same thing with people not encrypting their emails or not using tor as a bridge to the internet. In short: if you're the type of person who doesn't have their own key, yeah, prepare to get wrenched. The rest of us can manage our exposure quite easily.
> > Hur hur, street smarts better than smart smarts.
I never said that, all I said was that this is not the BGP problem, it's the $5 wrench problem.
And it's not a solved problem, governments seize crypto all the time and people get tortured for their keys regularly. Just a few days ago the US picked up 50,000BTC.
All of crypto is a get rich quick scheme, but people want their winnings denominated in fiat which is why exchanges exist. It's hard to reconcile "best performing asset in history!!" with "you can't get rich off bitcoin."
> In short: if you're the type of person who doesn't have their own key, yeah, prepare to get wrenched. The rest of us can manage our exposure quite easily.
You have this completely reversed. If you're the type of person who does have their own keys prepare to get wrenched.
It’s a widely-used aphorism for governments’ monopoly on violence, which, as others have pointed out, is ultimately how governments get people to do things they otherwise wouldn’t do.
It probably looks like someone showing up with a court order, but government agents with the right to use violence to enforce court orders is a large portion of what gives such orders teeth.
Of course, violence isn't the only sort of coercion... but it's part of it.
The problem I've encountered with schemes like you're describing (such as encryption schemes with decoys) is that it also makes it impossible to verify that you've given everything up.
Say you give the attacker all of your bitcoins/data, they're now incentivized to continue punishing you in perpetuity regardless, since you could have provided a decoy.
> I mean: unless the attacker knows exactly how much coins you have,
They don't need to know the exact number. They need to have a rough idea of the number. In the most likely scenario, where a state wants access, they tend to have a pretty good idea, because they get that information from investors, state agencies, banks and seized records.
Well, it was back when crypto still colloquially meant cryptography, not cryptocurrency. Of course, in this case it's the same thing because cryptocurrency uses cryptography underneath.
It's pretty much just men enforcing court orders, particularly in the Bahamas.
Side note: its interesting how "men" has gone from sometimes being gender neutral to being almost exclusively male and how "man" has gone most of the way down the same path.
If someone from the street does this there is a force called police which will help you. When the government does this, there is no one who will help you.
Oh man, not in the rich, sunny SoCal city that I live in. Those princesses are still sore about that time we burned down one of their police stations in the BLM protests a few years ago.
Like they refused to show up for a man stalking his ex and trying to break in, during daylight and in full view of everyone in the complex, and they continued to not show until after he murdered her.
I had assumed that they had some kind of obtuse M of N scheme with no sufficient number of parties in the same place at once, but that was perhaps too optimistic (?) of me.
That's can be pulled off, but actually requires planning and forethought to pull off. For instance, you'd want the keys to be on HSMs/hardware wallets in different jurisdictions (ideally rivals like US and Russia). Obviously this wasn't something they considered or planned for considering many (most?) of the higher ups were living in a shared penthouse in the Bahamas. Although, to be fair I don't fault them for not planning for this. If things get bad enough that men with guns are demanding you to do something, being able to reject their request would be pretty low on my list of priorities.
Armed government agents show up to your door asking you for half a billion dollars. You tell them "can't do it, I need this other key that's held by my partner in a different place". What do you think is going to happen next? "Understandable, have a good day" and they go home? Or they hold you in jail until you somehow find a way to comply?
but that's the very purpose of such schemes, to render you unable to comply.
if such an event happens in a more or less civilized country, you might eventually get some third party to confirm that you're unable to disclose the key
Absolutely the latter. My surprise comes more from FTX seemingly not even trying to do some kind of key protection scheme; it seems as though they made it easy for this seizure to happen. To my mind, this speaks large volumes about the quantity of misplaced confidence in these firms.
They made it easy to move the funds around on purpose, so that they could move the funds around any time they wanted. "They" being a very small handful of people, maybe just SBF himself, maybe a couple others. They didn't want it to be hard to move funds because that would require more accountability. Accountability was the last thing they wanted.
And how would you ever comply? The government can hold you hostage, but absent the consent of your collaborators there’s nothing you or the government can do. Which is not a great situation to be in, to be fair.
The government can let you call your collaborators. While they torture you. Of course you picked your partners carefully to be absolute psychopaths that would rather see you suffer and die than give up their keys. That's how you picked them as trustworthy partners in the first place!
interesting, since FTX was headquartered in the bahamas this seems lawful and not unreasonable. though some will argue the government doesn't have the right to do that, I think you sacrifice your protection when you commit fraud.
how quickly should the bahamas have announced about the asset seizure? is it common in other countries to not comment about (seizures in) ongoing investigations?
Another interesting angle to this is that the funds were collected in various different currencies, but all of them were converted into ETH. And they weren't converted carefully to make sure they got the full value, no attempt at OTC deals or anything; they were converted in a rush and dumped on the open market. This resulted in pretty clear loss of funds. It seems like a strange way for a government to operate.
That's not all: They also seized the funds with SBF's help after FTX had declared bankruptcy and SBF had stepped down as CEO. General counsel for FTX at the time indicated they were surprised by the fund movement and unaware of what was going on[1]. Shouldn't the Bahamas have been communicating with the people actually in charge of FTX at the time? Aren't those the people who would legally be in control of the funds?
I agree with your last paragraph, but the prior makes total sense. The government aren't crypto experts nor were they trying to min-max their incoming half a billion. They wanted it quick and easy.
I would expect a government to hold it as seized until they brought in both crypto experts and legal experts to help them determine what to do with it, probably via the judicial system. When Japan seized BTC from Mt Gox it was years before they converted it to Yen. The same goes for BTC seized by the US government in cases like Silk Road. The Bahamas didn't even convert it to the Bahamian dollar or USD. They converted to ETH. (Likely SBF did it for them.)
Nothing to do with crypto and more with the fact FTX corporate struture is such a mess, and account owbership close to impossible to identify. Based on that, authorities on the Bahamas, which hold jusrisdiction over at least part of FTX, did their thing by getting a person, that might or might not have been in a position of authority, to comply with a legal court order.
Ba
All in all, nothing to see here. And in case the confiscated assets cannot be confiscated by the Bahamas a court will ultimately return them.
Yes, however, governments do on occasion hire experts in various fields. During my last conference the discussion was exactly on how you can't just drop millions of BTC/ETH w/e into the market without effectively hurting the price. It is not like they were trying to be nice to the markets. The money just had to be split between several cooperating agencies so there was a reason to maximize return in USD.
I'm not defending their action, but there is a question of (a) authority and (b) capability. You're asking about authority, and yes SBF has stepped down, but the Bahamian regulator may have undertaken this on its own authority (possibly also with a judicial warrant, to perfect the authority), and so all they were lacking at that point was capability, which SBF could provide. It's sort of like if a criminal has a key to a shed with stolen goods in it -- we all agree the criminal does not legally own the goods, but he has the key, so you compel him to open it up.
The news article doesn't state the legal authority, but the statement from Securities Commission of the Bahamas of course does. "Under the Digital Assets and Registered Exchanges Act, 2020 (DARE Act), the Commission has the authority..."
The government has the right to do this because FTX agreed to this.
But does FTX have the right to agree to this? It’s like me agreeing with a stranger to sell your house and split the proceeds between us. FTX wasn’t entitled to the customers money and neither had the Bahamian authorities.
That makes no sense. They are incorporated under Bahamianan law, so that law takes precedence over any contractual agreement. I.e., FTX cannot enter into a contract that declares implicitly or explicitly that they won't follow said law.
FTX Trading Ltd. has a bunch of legal entities on the Bahamas. As shown in the latest Delaware court fillings. The Bahamas have at least jurisdiction over those legal entities and their assets. That FTX as a whole was unable, and/or unwilling, to keep proper track of accounts, cash and assets across their overly complicated corporate structure is hardly the Bahamas fault.
OK, yes, there are Bahamian entities over which Bahamian authorities likely have jurisdiction. But given what you say with regards to the complexity of FTX's corporate structure, it's likely difficult to determine that the assets that were transferred to Bahamian authorities actually belong to those Bahamian entities.
Maybe it's better that these assets are in the hands of Bahamian authorities, but it is highly questionable that the transfer happened after the Delaware filing, and that it was made in such a sloppy way that destroyed so much value.
My albeit very basic understanding is that once the bankruptcy filing was made in Delaware, the Bahamas had some obligation to defer to the Delaware courts.
It makes one wonder if this was actually an official action to begin with, and was not instead given a post hoc imprimatur only when it became obvious that the transfers could not be hidden.
Indeed - which is probably why the attorneys of the Delaware proceedings have applied to combine both cases.
Apparently, there is a court hearing scheduled for monday about that motion. I imagine the status of the seized funds will be one of the main topics of that hearing.
That's why crypto exchanges tend to be careful to not imply that they are banks. When you transfer your crypto to an exchange, the crypto is now theirs and they're just promising to give it back to you when you ask for it. Then they can do whatever they want with it internally until they go bust, at which point the promises all go in the trash.
That's just dodging the key question. Obviously the government has some rationale other than that they're taking it because they can. The problem is that they're still taking money that's owned by someone else, even if it's controlled by SBF. I'm sure there are strong international norms if not laws against a sovereign power directing a foreign financial actor to repay some sort of debt by pilfering client deposits, regardless of whether the debt is legitimate or not.
I suspect that if you deposit 100 ETH at FTX, legally, you no longer own the 100 ETH. Instead, you own an IOU from FTX stating that FTX owes you 100 ETH. FTX owns the ETH.
In an ideal world, an IOU from FTX for the amount of 100 ETH would be worth 100 ETH. Unfortunately, FTX is insolvent and bankrupt. The only thing the bankruptcy court can do is divide up FTX’s assets and distribute whatever FTX does have to their creditors. That is naturally going to entail taking possession of those assets.
This used to be a risk even with banks, and a lot of people during the Great Depression lost the money they had in the bank due to bank insolvency. The solution to this problem was the FDIC. If you have an American bank account, not only do you have an IOU from the bank for the number of dollars you have in that account, you also have an insurance policy from the FDIC that will pay you the value of the account (up to a specific limit) if the bank is unable to do so. And if the FDIC isn’t good for the money, that would mean the US government has defaulted on their debt, which probably means it’s the end of days, your dollars would have been worthless anyway, and you’re just going to have to get by on whatever canned food, water purification tablets, and ammunition you’ve managed to stockpile in your house until the world re-stabilizes into whatever cyberpunk dystopia comes after the collapse of the United States.
Historically that limit has always been waived during bank collapses, although my inability to remember a specific historical counterexample does not disprove its existence.
edited to add the limit still exists on the books for marketing purposes, in a weird turn of events unregulated non-banks liked to market that they're "as trustworthy as a bank" because they bought a bond policy for the FDIC limit so feel free to write them a check for less than the FDIC limit because they're bonded. The unregulated industries would get REALLY mad if the FDIC limit were doubled legally because then they'd have to pay about twice as much to get their bond. Then the FTC got real mad and I don't recall the outcome of that story although I don't see many references to the FDIC anymore in marketing material from unregulated companies, so that must not have gone well. This all went down in, like, the 80s not like last week or whatever.
Bahamas gov needs time to identify who owns what. They seized the assets for safekeeping and surely will collaborate with US Courts too.
Who would you rather have keeping your money? SBF with a warrant on his head and cash to disappear forever, or a national govermebt you can eventually sue if needed?
I don't think the idea is that the Bahamas will keep the crypto. It took it because it's a safe holder of it. It can get it back at some rate once the lawsuits go through.
Certainly, I would feel more confident getting my money back from a reasonable government than SBF.
The alternative isn't SBF keeping the funds. It's the funds going through the US bankruptcy proceedings alongside the rest of FTX's assets.
SBF chose to operate out of the Bahamas because of their lax legal structure. The fact that he claimed for days this was a hack makes this look like a failed attempt at buying his freedom. I have much more faith in the integrity of the US bankruptcy process than whatever nonsense is going to happen in the Bahamas...
The seizure is supposedly about the assets of FTX Digital Markets, which is incorporated in the Bahamas, so no foreign actor here from the Bahamian government's POV. Of course which one of that maze of shell companies is actually owning the assets on probably a question will have to be decided by the courts.
You could just read the bill, its pretty plain language. For the LOLs I'll read it for you. The DARE act boils down to crypto is completely socialized in the Bahamas UNLESS the business is being operated under pretty typical accounting principles. Or rephrased, hands off anarcho if you're not a crook, but if you're a crook then what amounts to "The SEC for the Bahamas" is your new CEO. This is not exactly the way banks are run in the USA, but its close enough to echo. It seems a reasonable way to regulate criminality in an industry. Its very easy to follow the common sense laws to avoid, essentially having your company nationalized by the regulator.
Who is "they":
Under Part V Section 41. Co-operative Power paragraph 2, as what boils down to "the SEC for the Bahamas" they will cooperate with other nations equivalent of the SEC "other domestic regulatory authority". So if the US SEC or US bankruptcy court asked them nicely, they can at their discretion (see paragraph 4) cooperate. My point above is the "they" deciding to do this is kind of unclear. Certainly gaining control of assets would kind of be the job of the bankruptcy court so if they asked the Bahamas Commission to help out, could, and in my opinion, probably did.
Based on my opinion of what I've read about what happened, SBF violated the entirety, not just one or two paragraphs, but the entire section, of Part III section 17 "Adequate systems and controls for digital token exchanges", subs a thru e inclusive, so they could be operating entirely on their own.
They could be doing all of this on their own or as a favor to the USA SEC, I donno. But no one seems to have considered Sec 41 in their rush to decide to "they" are whom are deciding things.
Anyway, regardless who decided to act:
Under Part II Section 5 paragraph 2 sub h, "do all things, and take all action, which may be necessary or expedient or are incidental to the discharge of any function or power given to the Commission".
The power they're probably invoking is Part II Section 4 paragraph 2 sub b, for the purposes of ensuring the "... development and maintenance of investor protection standards with respect to digital asset business..." So their legal purpose is to stop crooks from embezzling investors money. Combined with the paragraph above they likely think the leaving the investor assets in the control of SBF would be a little unwise as everyone seems to think he's already stolen billions of dollars worth of them, so what little is left should be preserved or at least removed from his opportunity to continue to pilfer.
Under Part III section 19 para 1 sub e, when they declared bankruptcy the registration to operate is auto-revoked and then para 4 hits "Where the Commission has suspended the registration of a digital asset business, the Commission may impose such conditions upon or give such directions to the registrant, including timeline for compliance, with which conditions or directions the registrant must comply."
So I have not seen the paperwork served on SBF in a leak or whatever, but it probably resembles the above.
No one is mentioning that the new FTX CEO wrote in a recent Chapter 11 filing that the hack we're discussing here was actually 2 events: the movement of ~$300 in crypto AND the dilutive printing of ~$300 in FTT.
Can somebody please explain that second one? Because this makes no sense at all.
> The “dilutive ‘minting’ of approximately $300m in FTT tokens by an unauthorised source” after FTX filed for bankruptcy. That’s along with the $372m hack.
Guessing: post ftx collapse someone minted new ftt tokens. Which should be strange because only FTX should have been able to do so.
Maybe SBF & co minted more FTT in order to dump to increase fiat liquidity during the withdrawal phase, and then right after had to hand everything over to the Bahamas. This isn’t the timeline popularly floated, tho
The mint was after withdrawals have stopped, and it does not look like they had run out of unlocked FTT.
In any case there was no buyer in size, so if they had dumped all they could the meagre proceeds would have probably been enough for like an extra half hour worth of withdrawals.
Perhaps this is a noob question but are those 2 related? When SBF was ordered to hand over $300M of tokens did he create $300M of FTT - technically complying with the order but not at the same time - that does sound like an SBF play. He previously stated that FTX weren't trading with customer deposits, technically true - the deposits were loaned to Alamada who were trading with them.
It doesn't really matter, FTT is a garbage token forever associated with fraud. Its value is zero and you can print how many you like without hurting anyone.
It matters a lot. Bahamas seizing existing crypto makes sense. Printing more and diluting holders is just bizarre. That would basically be the Bahamas doing a rugpull.
Because the article we are commenting on seems to be the Bahamas gov taking credit for the minting. “477M” is more than the 300m moved so must involve the mint as well. But it makes little sense why they would mint.
FTX chose to file for bankruptcy in America. There is a jurisdictional dispute between the US and the Bahamian court over where the bankruptcy proceedings should take place.
In my view FTX chose to incorporate in the Bahama's for a reason, and that reason wasn't the transparency and integrity of the Bahamian legal system.
They incorporated in "Antigua and Barbuda", which is a very seperate country. The only relationship FTX has with Bahamas, is the location of their headcounters, and a single wholly-owned subsidiary that probably didn't hold much in the way of funds.
This is the entity (alongside the physical presence of SBF) by which the Bahamas are arguing they have jurisdiction over the FTX bankruptcy proceedings.
The announcement was from the new FTX under emergency CEO Ray, not the old FTX under SBF. And the Bahamas claims that the specific FTX company that did the transfers, FTX Digital Assets, was not a part of the bankruptcy proceedings and that SBF was still its CEO.
Finally, new-FTX did not say they were "hacked", only that the transfers were not authorized by them.
Considering that SBF was reported to be "under supervision" by the authorities, it doesn't seem too implausible that the Bahamian government showed up to their office and politely requested an employee with access to transfer the funds, and for them to keep their mouth shut.
The whole thing has been surrounded by misinformation, misdirection and outright lies. I still don't think there has been enough credible information released to form a complete picture at this point.
Exactly. The media lied about SBF (or at least didn't research anything) since and for years. There's no reason to believe any reporting they do now is anywhere near the full picture.
There's also no reason to believe articles written about SBF aren't politically motivated anymore.
Any idea why a serial liar lied once again? In an interview where he basically admits to his public persona having been fake and almost everything he said in interviews over the past years being untrue. It's not the only thing that seems untrue in that interview, because it's been reported he had a special setup that let him transfer funds and cook the books without even regular employees noticing. It wasn't simply a series of unfortunate mistakes, everything points towards his companies having been setup for fraud.
I find some of the takes on this sub really amazing. The real question you should ask yourself is why did Vox never disclose in previous hype pieces they did on this person that they received a grant from his "philanthropic" 'Building a Stronger Future' foundation. Only after the implosion of FTX and Alameda have they added a disclaimer to relevant articles.
SBF hands over the keys to the Bahamas govt. and tries to publicly claim it as a hack, and then the Bahamas government decides to become one of the largest holders in the world of Ethereum.
There are still a lot of questions to this story that will be interesting to see filled in.
> [..] accused Bankman-Fried of attempting to undermine their efforts [..] by pushing the second bankruptcy case
if that is true they might have very well had reason to lie until the bankruptcy proceedings in the Bahamas have started successfully/maybe some under the table agreements where completed.
I wouldn't be surprised if they have some deal with the Bahamian government giving them some benefit for allowing the government to size millions of crypto assets.
But there might very well have other reasons. Like them not knowing that the transaction was a asset seizure in context of the bankruptcy proceeding is a possibility as crazy as it might sound.
> Like them not knowing that the transaction was a asset seizure in context of the bankruptcy proceeding is a possibility as crazy as it might sound.
This would _also_ imply that whoever internal to FTX that authorized the asset transfer for siezure didn't tell anyone and covered their tracks well enough that SBF didn't know about it.
I mean, it's possible? But seems more straightforward that SBF was simply lying in the vox interview, he still seemed deluded enough to think he could fundraise his way out of the abyss, and this lie was part of his attempt to raise funds.
The Bahamas has a total population of a smallish city and surely a national budget to match. Grabbing 500M anonymously (while letting everyone run around for days thinking it was a hacker) doesn't make much sense either. Did they put their entire country's budget on the exchange or something?
When exchanges registered in the Bahamas are in danger of losing customers money, Bahamian government has authority and duty to seize assets to protect customers. Bahamian government is taking custody, it's not their money.
I'm not so sure. Is it correct that the Bahamian government prompty converted all the seized tokens to ETH? If the seizure was for purposes of "safekeeping", what gives the Bahamians the right to trade in other people's cryptographic tokens?
This is conjecture on conjecture, but generally if you're holding assets in trust you can sell/trade them if it would be in the beneficiaries' best interests.
"Holding assets in trust" Does that apply to assets that were seized? To me, the phrase "in trust" implies that the owner of the assets has entrusted them to you, and you have a fiduciary duty to them.
[I'm uncomfortable referring to cryptographic tokens as "assets". I think of an asset as something with an intrinsic value, albeit floating. Cryptographic tokens have a price, but no value.]
And also has legal entities in the Bahamas. Plus, SBF is their himself, so the legal HQ, where decisions are made (an important factor in corporate and tax law) is to an extent yet to be determined by the various courts, the Bahamas.
A seizure of funds is certainly not the first step of bankruptcy proceedings. SBF seems to have "fled" to the Bahamas, and he would obviously have the access needed to make the transfer. And as the article says, the Bahamas are trying to get the US Chapter 11 proceedings thrown out arguing their own bankruptcy proceedings have priority. There was also the mystery texts from SBF arguing "Chapter 11 was my biggest mistake" and "trying to resolve a jurisdictional issue with Delaware".
Come again? You think he handed it over to the government in exchange for his freedom and share it afterwards? Really? Pretty sure the Bahamas are going to coopertae with, e.g., the Delaware courts in the complex bankcrupcy proceedings that will follow.
Finance noob here, and purely out of couriosity, but could someone explain what the actual legal status of FTX' deposits is now?
From what I got, crypto exchanges spend a lot of effort to not be banks in a legal sense, so the special protections for customer deposits with traditional banking don't apply - the deposits are technically owned by FTX, not the customers.
On the other hand, customers do appear to have some claims in the bankruptcy proceedings, enough that the SEC seized the funds. So it's not just "you pay me, I make number go up" either.
That's pretty smart. The Bahamian government "seizes" the money, takes their cut, you get the rest, and you can claim your money was seized instead of having to incur the legal risk of moving that money yourself.
All that happened in this case is someone created their own coin and sent it to the hacker address. If you create a coin, you can name it whatever you want, and you can send it to whoever you want.
Strong words. You should read the latest filling from FTXs new CEO with Delaware courts. FTXs financial and corporate structure is such a mess, that nobody knows who owns and controlls what. Heck, they even don't know who worked when at which FTX company. So, for the Bahamas, freezing and confiscating assets is prudent thing to do. The crypto will be held in custody until courts, including the Delaware ones, figure out who has what claim on which assets and cash thelat can be recovered from FTXs desintegration. At least those 477 million are easy to locate, much harder to allocate to specific claims so.
I would agree if the Bahamas government didn't first deny that they ordered SBF to surrender those assets and then only after they were caught by us in the community through tracking the transactions did they formally announce the seizure. Do you not find that a bit coincidental? Why the conversion to ETH? Who authorised it? There was and is no judiciary evidence supporting the Bahamas government's position and the Delaware court has uncovered clear suspicious activity. Why did they lie and then change their story? We must wait to see what come out but a shady blacklisted country managing my money is not acceptable to most of us.
The Bahamas are a sovereign jurisdiction, not a US state. So if they decide to have jurisdiction over people and legal entities residing and registered in the Bahamas, no additional court decision is needed.
No one is challenging that Bahamas is a country. The only holdings in the country was a shell holding nearly nothing of value. Antigua and Barbuda and Delaware were principle locations of the holdings. FTX Digital Markets was a shell for SBF to buy his way into the country - everyone knows that already. Do you not see a conflict of interest for a state regulator to be photographed with SBF at a ground breaking ceremony and then lie about ordering seizure and then only after being caught red handed back tracking and saying they ordered it? Shady business.
"FTX wrote in a court filing earlier this week that there was “credible evidence that the Bahamian government is responsible for directing unauthorised access to the debtors’ systems for the purpose of obtaining digital assets of the debtors — that took place after the commencement of these [bankruptcy] cases”."
Maybe, but that notion of theft seems better than to live in a world where anyone can barge up to you and, for example, take your meal, leaving you hungry. Would you agree?
