FTX Debtors Challenged Bahamas Regulator’s $3.5 Billion Crypto Valuation

FTX Trading Ltd. and its affiliated Chapter 11 debtors challenged the Securities Commission of The Bahamas on December 30, 2022, over cryptocurrency transferred into a regulator-controlled wallet after the exchange collapsed. The debtors said the wallet was worth approximately $167 million at 2:00 p.m. Eastern Standard Time on December 30, far below the regulator’s claim that the assets had been worth more than $3.5 billion when transferred on November 12.

The dispute mattered because it was not merely an argument about token prices. It raised unresolved questions about which FTX entity owned the assets, which insolvency proceeding should control them and how much value could realistically be recovered for customers and creditors.

Two incompatible valuations

In its December 30 statement, the FTX debtors identified the transferred cryptocurrency as approximately 195 million FTT, 1,938 ETH and miscellaneous tokens they described as lacking substantial value. They said blockchain information showed the assets in a single Fireblocks wallet controlled by the Bahamian commission.

The debtors estimated that portfolio at approximately $296 million using spot prices at the time of the November 12 transfer. They placed its value at approximately $167 million at 2:00 p.m. EST on December 30. Both estimates assumed that the entire FTT position could be sold at quoted spot prices. The debtors expressly warned that there was no assurance such a large quantity of FTT could be sold at those prices, or sold at all.

Those figures were contemporaneous claims from the bankruptcy estate, not an independently audited appraisal. The stated measurement window was a point-in-time spot-price estimate, and its principal limitation was the assumption that a very large, concentrated FTT position had liquidity at the displayed market price.

The Securities Commission’s December 29 account was sharply different. It said that assets under the custody or control of FTX Digital Markets Ltd. or its principals had been moved on November 12 to wallets under the commission’s exclusive control. It valued those assets at more than $3.5 billion using market pricing at the time of transfer and said they would remain safeguarded until the Supreme Court of The Bahamas directed their delivery to owners or liquidators.

Ownership became as important as price

The FTX debtors asserted that the transferred cryptocurrency belonged to the Chapter 11 estates and had moved without their authorization after the U.S. bankruptcy cases began. They said FTX Digital Markets was a local service company rather than the owner or operator of FTX.com, and announced that they would seek prompt return of the assets for creditors.

The commission maintained that it acted as regulator under a Bahamian Supreme Court order because it saw a significant risk that assets could dissipate following reported cyberattacks and restricted access to company systems. Its December 29 release did not publish a token-by-token inventory or valuation methodology sufficient to reconcile its figure with the debtors’ estimate.

As of December 30, neither side’s ownership position had been finally adjudicated in the records reviewed here. Nor were the two headline values comparable in the manner of independently verified balance-sheet figures. The dispute therefore demonstrated how token composition, thin liquidity, entity boundaries and competing courts could determine creditor recoveries as much as nominal wallet balances.

Later context

On January 2, 2023, the Securities Commission responded that the debtors’ December 30 assertions relied on incomplete information and reiterated that disputed ownership could be resolved later while the assets remained secured. That later statement confirms that the valuation and jurisdictional conflict existed on December 30; it did not retrospectively establish which valuation was correct on that date.