FTX filed for bankruptcy on Friday, one of the highest-profile cryptocurrency breakouts, after traders rushed to withdraw $6 billion from the platform in just 72 hours and rival exchange Binance abandoned a proposed bailout deal. In a statement on Sunday, the Royal Bahamas Police Force said: “In light of the collapse of FTX Worldwide and the provisional liquidation of FTX Digital Markets Ltd., a team of financial investigators from the Financial Crimes Investigation Branch is working closely with Bahamas Securities Commission to investigate whether any misconduct of criminal conduct occurred.” FTX did not immediately respond to Reuters’ request for comment. Newly appointed FTX CEO John J. Ray III said Saturday that the company is working with law enforcement and regulators to mitigate the problem and that it is making “every effort to secure all assets, wherever they are.” The stock market’s dramatic fall from grace saw its 30-year-old founder Sam Bankman-Fried, known for his shorts and T-shirts, transform from the poster child of crypto successes to the protagonist of the industry’s biggest crash. Bankman-Fried, who lives in the Bahamas, has also been the subject of speculation about his whereabouts and denied rumors on Twitter that he had flown to South America. Asked by Reuters on Saturday if he had flown to Argentina, he replied by text: “No.” He told Reuters he was in the Bahamas. The turmoil at FTX has seen at least $1 billion of client funds disappear from the platform, sources told Reuters on Friday. Bankman-Fried had transferred $10 billion of client funds to his trading firm, Alameda Research, the sources said. New problems emerged on Saturday when FTX’s US general counsel, Ryan Miller, said in a Twitter post that the company’s digital assets are being moved to so-called cold storage “to mitigate damage when unauthorized transactions are observed.” Cold storage refers to crypto wallets that are not connected to the internet to protect them from hackers. Blockchain analytics firm Nansen said on Saturday that it saw $659 million in outflows from FTX International and FTX US in the past 24 hours. In the bankruptcy filing, FTX Trading said it has assets of $10 billion to $50 billion, liabilities of $10 billion to $50 billion and more than 100,000 creditors. Ray, a restructuring expert, was appointed to take over as managing director. A document Bankman-Fried shared with investors on Thursday and reviewed by Reuters showed FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of these assets were liquid, which led to the cash crunch that ended with the company’s bankruptcy. The collapse shocked investors and sparked fresh calls for regulation of the cryptocurrency sector, which has seen losses pile up this year as cryptocurrency prices collapsed. Bitcoin fell below $16,000 for the first time since 2020 after Binance abandoned its FTX bailout deal on Wednesday. On Saturday it was trading around $16.5600, down more than 75% from the all-time high of $69,000 reached in November last year BTC=BTSP. Reported by Jasper Wade in the Bahamas. Additional reporting by Maria Ponnezhath and Jyoti Narayan in Bangalore; Writing by Megan Davis in New York. Editor: Daniel Wallis Our Standards: The Thomson Reuters Trust Principles.
