FTX Teams in the US and Bahamas Coordinate Crypto Recovery Efforts

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Jan 6 (Reuters) – FTX’s U.S.-based bankruptcy team has agreed to coordinate with liquidators to end operations for the Bahamas crypto exchange, resolving a dispute that threatened the recovery of what could represent billions of dollars in lost funds.

In a joint statement on Friday, the two sides said they would work to share information, secure assets and coordinate disputes against third parties.

FTX’s US bankruptcy team has been at odds with Bahamian officials since November, when competing bankruptcies were filed in both countries.

The Bahamas Securities Commission began liquidation proceedings on November 10 against FTX Digital Markets Ltd., the company’s Bahamas-based unit. The next day, a U.S. Chapter 11 proceeding was filed in Delaware, which included more than 100 FTX entities, including FTX Trading and crypto hedge fund Alameda Research.

Bahamian regulators have seized assets from FTX, which officials say were intended to protect assets that will ultimately be returned to creditors of FTX Digital Markets.

John Ray, who took control of FTX after founder Sam Bankman-Fried resigned in November, had accused the Bahamas-based liquidators of colluding with the disgraced founder to undermine the US bankruptcy filing and transfer assets to the Bahamas.

Rays’ lawyers had denied the liquidators’ request for access to internal systems and Slack and email accounts, saying they did not trust Bahamians with information that could be used to misappropriate team assets from American bankruptcy.

Bahamian securities regulators have accused Ray of taking a cavalier attitude to the truth in his statements about Bahamian asset seizures.

The US team also disputed the size of the Bahamian assets that were seized, saying they were worth $296 million in November, not $3.5 billion as the liquidators estimated. Friday’s statement indicates that the US team is now satisfied that the assets are properly protected.

Ray said there are still issues to be resolved in the settlement with the Bahamas liquidators. Friday’s statement said details of the agreement would be filed “shortly” with the US bankruptcy court in Delaware.

Ray, one of the liquidators and lawyers for the liquidators did not respond to a request for comment.

Bankman-Fried was arrested for fraud and pleaded not guilty on January 3. Ray said the exchange had lost $8 billion in customer money, and added that the bankruptcy team was focused on recovering assets to repay creditors.

Reporting by Akash Sriram in Bangalore; Editing by Chizu Nomiyama and David Gregory

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Tom Hall

Thomson Reuters

Award-winning journalist with more than two decades of international news experience, focusing on high-stakes legal battles on everything from government policy to business negotiation.

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