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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'r

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.

HWR_14 4y ago
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.
- deleted 4y ago
  [deleted]
- initplus 4y ago
  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...
philwelch 4y ago
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.
- VLM 4y ago
  (up to a specific limit) 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.
freetanga 4y ago
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?
VLM 4y ago
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.
xg15 4y ago
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.

HWR_14 4y ago

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.

deleted 4y ago
[deleted]
initplus 4y ago
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...

philwelch 4y ago

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.

VLM 4y ago
(up to a specific limit) 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.

freetanga 4y ago

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?

VLM 4y ago

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.

xg15 4y ago

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.