The bankruptcy team for FTX in the United States has agreed to work together with liquidators who are closing down the crypto exchange’s activities in the Bahamas, in order to avoid losing potentially billions of dollars in lost funds.
The two sides stated in a joint statement on Friday that they will cooperate to share information, protect assets, and plan legal action against third parties.
Since November, when rival bankruptcy filings were made in the two nations, FTX’s US bankruptcy team has been at conflict with Bahamian authorities.
On November 10, FTX Digital Markets Ltd, the business unit domiciled in the Bahamas, filed for liquidation with the Securities Commission of the Bahamas.
The following day, more than 100 FTX businesses, including FTX Trading and the cryptocurrency hedge fund Alameda Research, filed for US Chapter 11 protection in Delaware.
Reorganizing assets and debt is a key component of Chapter 11 bankruptcy under the US Bankruptcy Code, which is typically filed by corporations.
In order to protect assets that will eventually be returned to FTX Digital Markets’ creditors, Bahamian regulators have seized FTX assets, according to officials.
After the company’s founder, Sam Bankman-Fried, left in November, John Ray, who assumed leadership of the company, accused Bahamas-based liquidators of conspiring with him to thwart the US bankruptcy case and transfer assets to the Bahamas.
The liquidators had requested access to internal systems, Slack channels, and email accounts, but Ray’s lawyers had rejected the request, stating that they “did not trust” the Bahamians with knowledge that could be used to steal assets from the US bankruptcy team.
Ray was accused by Bahamian securities regulators of speaking about the Bahamian asset seizures with “a casual approach towards the facts.”
The US side has also challenged the value of the confiscated Bahamian assets, claiming that they were only worth $296 million in November rather than the $3.5 billion the liquidators claimed. According to the statement released on Friday, the US team is now certain that the assets are being properly pro
According to Ray, several details of the contract with the Bahamian liquidators still need to be worked out. The US Bankruptcy Court in Delaware would get the agreement’s specifics “shortly,” according to a statement released on Friday.
Requests for response from Ray, one of the liquidators, and the liquidators’ attorneys went unanswered.
On January 3, Bankman-Fried entered a not-guilty plea after being detained on suspicion of fraud. The bankruptcy team was concentrating on retrieving assets to pay creditors, according to Ray, who also claimed that the exchange lost $8 billion in consumer funds.
