Felix Ng
FTX former CEO Sam Bankman-Fried, co-founder Gary Wang and director of engineering Nishad Singh are understood to be in the Bahamas and are “under supervision” by the local authorities.
A source familiar with the matter told Cointelegraph that the three former FTX executives, as well as Alameda Research CEO Caroline Ellison, are looking for ways to flee to Dubai. While the plan was made assuming that the United States “doesn't have any extradition treaties” with the UAE, the nations signed a mutual legal assistance treaty (MLAT) back on Feb. 24, 2022, to work against criminals.
“Right now three of them, Sam, Gary, and Nishad are under supervision in the Bahamas, which means it will be hard for them to leave,” said the source, who asked to remain anonymous. The source has also revealed that Ellison is currently in Hong Kong, adding that means “she might be able to get to Dubai.”
However, community member coinbureau cited his source in the U.S. government to confirm that FTX members attempting to reach Dubai will get detained at the airport and sent straight back to the United States.
A similar theory was discussed as part of a 16-hour-long Twitter Space by The Crypto Roundtable Show host Mario Nawfal, with a guest speaker claiming “trusted sources” have witnessed Bankman-Fried “in a locked space” with authorities in Albany Tower — a luxury resort located in New Providence in The Bahamas.
An unverified rumor also suggests that Bankman-Fried is currently joined by his father, Joseph Bankman.
Rumors that Bankman-Fried had been arrested on the tarmac at The Bahamas Airport made the rounds on Nov. 10 with evidence suggesting that Bankman-Fried’s private jet had been grounded for 40 minutes while on the way to Miami from Nassau.
On Nov. 12, rumors then pointed to Bankman-Fried having landed in Buenos Aires in the early hours of the day after Twitter users tracked the coordinates of his private jet using the flight tracking website ADS-B Exchange.
Later in the day, Bankman-Fried in a text message to Reuters denied speculation that he had fled to Argentina, claiming that he was still in The Bahamas.
The former FTX CEO is at the center of one of the industry’s biggest scandals.
A report from The Wall Street Journal on Nov. 9 suggested that the U.S. Department of Justice and the Securities and Exchange Commission are investigating the collapse of the crypto exchange.
The Department of Financial Protection and Innovation (DFPI) in the state of California announced on Nov. 10 that it will open up an investigation as to the “apparent failure” of the exchange.
Approximately 130 companies in the FTX Group, including FTX Trading, FTX US, and Alameda Research started bankruptcy proceedings on Nov. 11.
Disclaimer: The article has been updated to clarify that the US and the UAE have an agreement on evidence sharing, judicial cooperation and assistance in criminal investigations and prosecutions. As a result, U.S.-based fugitives attempting to move to Dubai will most likely be detained and sent back to the United States.
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Arijit Sarkar
Just days after Binance CEO Changpeng “CZ” Zhao warned about the onset of greater regulatory scrutiny amid the FTX collapse, the Financial Secretary of Hong Kong called for a stronger focus on transparency and proper supervision when dealing with virtual assets.
Financial Secretary Paul Chan highlighted the importance of being “steady and cautious” when promoting the development of the virtual asset industry in Hong Kong. A poster accompanying Chan’s post, roughly translated to:
“While actively embracing innovation, there must be a regulatory package that adapts and keeps pace with the times to properly manage risks, create prerequisites for the orderly and vigorous development of the market.”
In October, the Hong Kong government issued a policy — Policy Declaration on the Development of Virtual Assets in Hong Kong — introducing a regulatory framework and risk-based regulatory direction. In addition, the government proposed several pilot initiatives to test and enhance the technologies powering virtual assets.
According to Chinese reporter Colin Wu, Chan’s post can be seen as a manifesto to welcome cryptocurrency companies around the world. In her words:
“The Financial Secretary of Hong Kong said that because of the bankruptcy of FTX, transparency and proper supervision must be strengthened.”
Chan didn’t take offense at FTX’s collapse. Instead, he highlighted the importance of maintaining safety and properly managing risks, explaining that:
“We must not only make full use of the potential brought by innovative technologies, but also be careful to guard against fluctuations and potential risks that may be caused by them, and avoid these risks and impacts from being transmitted to the real economy.”
In addition, his advice for crypto companies was to maintain separate accounts for keeping client assets. As pointed out by Wu, Chan also recommended crypto businesses set aside actual operating expenses for at least 12 months, among other requirements.
On an end note, Chan reiterated that a stable and sustainable crypto industry would become a reality with transparent operations and proper and appropriate supervision.
FTX CEO Sam Bankman-Fried and two of his associates are currently planning to shift bases away from the United States to evade possible prosecution. However, the plan to flee Dubai may not be feasible due to a treaty signed between the two nations.
If the FTX members attempt to reach Dubai, the agreement between the two nations will allow authorities to detain the fugitives at the airport and send them back to the United States.
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Arijit Sarkar
Crypto exchange FTX joined many other fallen projects — including Terra, Three Arrows Capital, Celsius and Voyager — in filing for bankruptcy in 2022. Owing to the devastation caused by multi-billion United States dollar losses suffered by businesses and investors, the man running the biggest crypto exchange, Binance CEO Changpeng “CZ” Zhao, envisions an era of greater regulatory scrutiny in the near future.
With one of the biggest crypto businesses falling overnight, CZ believed the episode was devastating for the industry, which took away a lot of consumer confidence. Speaking at Indonesia Fintech Summit 2022, he said:
“I think basically we've been set back a few years now. Regulators rightfully will scrutinize this industry much, much harder, which is probably a good thing, to be honest.”
Regulations in crypto historically circled around Know Your Customer (KYC) and Anti-Money Laundering (AML). However, CZ reiterated his long-standing belief that regulations must focus on exchange operations, such as business models and proof of reserves. As a result, he believed that tighter regulatory scrutiny around crypto business operations is around the corner.
While FTX’s collapse is bound to have a short-term impact on retail investors, in the longer term, this is a wake-up call for discussions about how to handle risks across crypto ecosystems. Speaking specifically about FTX, he said:
“The last three days is just a revelation of problems. The problems were there way longer. This problem wasn’t created in the last three days.”
CZ pointed out that the biggest red flag about FTX was Alameda Research’s financials, which were full of FTX Token, that made him finalize the decision to sell off Binance’s FTT holdings worth over $2 billion at the time.
The following day, FTX CEO Sam Bankman-Fried reached out to CZ with a deal that “did not make sense from a number of fronts”. At the same time, CZ hoped to get an over-the-counter (OTC) deal for protecting users:
“Original intention was let's save the users, but then the news of misappropriating user funds, especially U.S Regulatory Agencies investigations (made us realize) we can't touch that anymore.”
CZ believes that increasing transparency and educating regulatory agencies about crypto audits and cold wallet information will make the industry much healthier. Finding the right balance of rules is not asked, he said.
The entrepreneur highlighted the need for easy tools for saving private keys and other security functionalities but argued that the crypto ecosystem will grow in incremental steps and not giant leaps.
Taking a proactive approach to regaining investor confidence, Binance published a new page titled “Proof of Assets,” which displays details about the exchange’s on-chain activity for its hot and cold wallet addresses.
“Our objective is to allow users of our platform to be aware and make informed decisions that are aligned with their financial goals,” said Binance in an official statement.
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This Daily Dose was brought to you by Cointelegraph.
