The Securities Commission of the Bahamas has frozen the assets of FTX Digital Markets and related parties, calling it a "prudent course of action" to "preserve assets and stabilize the company".
The regulator also suspended FTX's registration and appointed an attorney - Brian Sims, a senior partner at Lennox Paton - as a provisional liquidator of the assets.
FTX is based in the Bahamas and is a separate entity from FTX US.
In a statement on 10 November, the regulator said: "The commission is aware of public statements suggesting that clients' assets were mishandled, mismanaged and/or transferred to Alameda Research. Based on the commission's information, any such actions would have been contrary to normal governance, without client consent and potentially unlawful."
Vice President of Communications and Corporate Social Responsibility for FTX Digital Market Valdez Russell said the Securities Commission's swift action demonstrated the importance of their role in maintaining the integrity and jurisdictional reputation of The Bahamas.
"As FTX strives to do right for customers, investors and employees, the involvement of a provisional liquidator will prove helpful in a process that facilitates the requisite due diligence that will contribute to a better future for digital assets in a global landscape," Russell said in a statement.
FTX chief executive Sam Bankman-Fried is under investigation by the US Securities and Exchange Commission for potential securities law violations, Bloomberg reported, citing a source. Bloomberg also reported, citing sources, that Cyprus plans to suspend the licence of the exchange's European arm.
Earlier this week, Binance said it was stepping away from its plans to acquire FTX, leaving Sam Bankman-Fried's crypto empire on the verge of collapse.
The reversal of plans came one day after Binance CEO Changpeng Zhao, known as CZ, announced his firm had reached a non-binding deal to buy FTX for an undisclosed amount, which would have saved the company from a liquidity crisis.
International Investment covered the story yesterday in a industry comment piece outlining three key takeaways from the 'FTX fiasco'.
