Police Consider Criminal Probe; Solana Drops Again

(Bloomberg) — The Bahamian police are working with the Bahamas Securities Commission to investigate whether there was any criminal misconduct in the collapse of Sam Bankman-Fried’s crypto exchange FTX. He was questioned by Bahamian police and regulators Saturday, according to a person familiar with the matter.

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Crypto altcoin Solana, which was tied to a blockchain backed by Bankman-Fried, declined for a third day as the fallout from the collapse of his FTX empire continued to reverberate. The crypto market has lost about $200 billion in value in the past week.

In other developments, analysts say about $662 million in tokens mysteriously flowed out of both FTX’s international and US exchanges. According to investment materials seen by the Financial Times, FTX Trading International held just $900 million in liquid assets on Thursday against $9 billion of liabilities.

Key stories and developments:

  • Bankman-Fried: From Crypto King to King of Tech Bubble’s Losers

  • Big Investors Are Giving Up on Crypto Markets Going Mainstream

  • Summers Says FTX Meltdown Has ‘Whiffs’ of Enron-Like Scandal (1)

  • ‘It’s All Gone’: FTX Bankruptcy Is Worst Fear for Retail Traders

  • Alpha-Male Crypto ‘Bloodsport’ Sows a Catastrophe at FTX

(All time references are New York)

Bahamian Police Look Into Criminal Probe (11:53 a.m.)

A team from the Financial Crimes Investigation Branch is working with the Bahamas Securities Commission to investigate if any criminal misconduct occurred in the collapse of FTX.

Solana Slide Deepens; Bitcoin and Ether Stable (8:30 a.m.)

A three-day decline for crypto altcoin Solana deepened on Sunday, as developers considered spinning off one of the blockchain network’s most prominent and FTX-affiliated project. Solana fell as much as 14% to $12.86 as of 1:30 p.m. in London. Crypto bellwethers Bitcoin and Ether have lost a little over 1% each in the last 24 hours.

Other altcoins including Polkadot, Avalanche and Tron, typically more volatile than larger cryptocurrencies due to lower liquidity levels, lost between 1.7% and 5.4%.

Binance Stops Deposits of FTX’s Token FTT (3:30 a.m.)

Binance halted deposits of FTT, FTX’s token, “to prevent potential of questionable additional supplies affecting the market,” Binance CEO Changpeng “CZ” Zhao said on Twitter. Zhao said that he would encourage other exchanges to do the same thing. Justin Sun said Huobi Global would echo Zhao’s advice.

Zhao added that FTT contract deployers moved all remaining FTT supplies worth $400 million, “which should be unlocked in batches.” Binance followed up to say it had noticed a “suspicious movement” of a large amount of FTT by the token’s contract deployers.

Matrixport Says 79 Clients Affected by FTX, ‘No Risk of Insolvency’ (11:38 p.m.)

Crypto financial-services platform Matrixport “continues to operate normally and the company has no risk of insolvency with respect to the developments at FTX and Alameda,” according to Ross Gan, head of public relations.

Matrixport had 79 clients that incurred losses via exposure to three products on its platform that were linked to FTX, Gan said.

Kraken Freezes Accounts Possibly Related to FTX (11:33 p.m.)

Crypto exchange Kraken said it has frozen Kraken account access to certain funds it suspects to be associated with “fraud, negligence or misconduct” related to FTX. Kraken said in a tweet it’s in contact with law enforcement and plans to resolve each account on a case-by-case basis.

Bankman-Fried Interviewed by Police in Bahamas (9:42 p.m.)

Former crypto mogul Sam Bankman-Fried was interviewed by Bahamian police and regulators on Saturday, according to a person familiar with the matter. Bankman-Fried didn’t immediately respond to a request for comment.

The inquiries from Bahamian authorities add to the mounting legal pressure that Bankman-Fried is facing since his FTX empire crumbled over the past week. In the US, he is facing scrutiny from the Securities and Exchange Commission over whether he broke securities rules.

Bahamas Says it Didn’t Authorize Local Withdrawals by FTX Exchange (9 p.m.)

Bankrupt crypto exchange FTX’s move to allow withdrawals in the Bahamas was questioned by the nation’s securities regulator.

The Securities Commission of the Bahamas in a statement Saturday said that it hadn’t “directed, authorized or suggested” the prioritization of local withdrawals to FTX Digital Markets Ltd.

It added that such withdrawals could be clawed back.

Jump Crypto Says It Remains Well Capitalized After FTX Exposure (5:59 p.m.)

Jump Crypto, a cryptocurrency trading firm, told customers on Saturday it remains “well capitalized” after exposure to FTX. In a series of tweets, Jump said its exposure was “managed in accordance with our risk framework.” The company did not specify the exact nature of its exposure to Sam Bankman-Fried’s collapsed digital-asset empire. Jump’s assurance comes after FTX was hit by a mysterious outflow of about $662 million in tokens.

FTX to Seek Enforcement Aid on Unauthorized Withdrawals (1:46 p.m.)

FTX is launching an investigation with law enforcement into unauthorized withdrawals from some of its crypto wallets, a company executive said. The company, which filed for bankruptcy this week, said it is cooperating and coordinating with “law enforcement and relevant regulators.”

Liabilities Dwarfed Liquid Assets: FT (1:13 p.m.)

FTX Trading held $900 million in liquid assets against $9 billion of liabilities the day before the bankruptcy filing, the Financial Times reported, citing investment materials and a spreadsheet the newspaper had seen. Most of the recorded assets are either illiquid venture capital investments or crypto tokens that are not widely traded. The biggest asset as of Thursday was listed as $2.2 billion worth of a cryptocurrency called Serum.

Some FTX Staffers Leaving for HK: Semafor (11:55 a.m.)

Engineers and traders working at FTX and Alameda Research in the Bahamas, where the crypto exchange is based, have left for Hong Kong and elsewhere, Semafor reported, citing people close to current and former Caribbean-based FTX employees. Bankman-Fried and most of his inner circle are still in the Bahamas, the report said.

Kraken to Help In Probing Unauthorized Withdrawals (11:51 a.m.)

Crypto exchange Kraken said it knows the identity of an attacker who performed unauthorized withdrawals from rival FTX’s platform. The perpetrator moved some funds from a Kraken account to the wallet they were using to hold some stolen tokens on Saturday, blockchain security firm Hacken.io said, citing transaction data. Kraken was then able to identify the attacker by checking its platform for data on the original address, its chief security officer Nick Percoco said in a tweet.

Yellen Says Debacle Shows Need for Regulation (5:48 a.m.)

US Treasury Secretary Janet Yellen said the implosion of FTX “shows the weaknesses” within the sector and that the market for digital assets required “very careful regulation.” She added digital assets are not currently a threat to the wider financial system.

FTX Hit by Mysterious Outflow of About $662 Million (3:03 a.m.)

Blockchain analytics firm Nansen, which gave the overall estimate of $662 million in withdrawals, said the coins flowed out of both FTX’s international and US exchanges. Elliptic said initial indications show almost $475 million had been stolen in illicit transactions, with the stablecoins and other tokens that were taken being rapidly converted to Ether on decentralized exchanges — “a common technique used by hackers in order to prevent their haul being seized.”

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