FTX’s bankruptcy team in the United States has agreed to work with liquidators winding down the crypto exchange’s operations in the Bahamas, resolving a dispute that threatened the recovery of potentially billions of dollars in lost funds.
The two sides said in a joint statement on Friday that they will work together to share information, secure property, and coordinate litigation against third parties.
Since November, when competing bankruptcies were filed in the two countries, FTX’s US bankruptcy team has been at odds with Bahamian officials.
On November 10, the Bahamas Securities Commission initiated liquidation proceedings against FTX Digital Markets Ltd., the company’s Bahamas-based subsidiary.\\
The following day, a U.S. Chapter 11 proceeding in Delaware was filed, involving over 100 FTX entities, including FTX Trading and crypto hedge fund Alameda Research.
Bahamian regulators seized FTX assets, which officials said were intended to protect assets that would eventually be returned to FTX Digital Markets’ creditors.
John Ray, who took over FTX after founder Sam Bankman-Fried resigned in November, accused Bahamas-based liquidators of conspiring with the disgraced founder to undermine the US bankruptcy case and divert assets to the Bahamas.
Ray’s attorneys had refused the liquidators’ request for access to internal systems, Slack, and email accounts, claiming that they “did not trust” the Bahamians with information that could be used to divert assets away from the US bankruptcy team.
Ray was accused by Bahamian securities regulators of having “a cavalier attitude toward the truth” in his statements about the Bahamian asset seizures.
The US team has also disputed the value of the seized Bahamas assets, claiming they were worth $296 million in November, rather than the $3.5 billion estimated by the liquidators. According to the statement issued on Friday, the US team was now confident that the assets were properly safeguarded.
Ray stated that some issues in the agreement with the liquidators from the Bahamas needed to be worked out.
According to the statement issued on Friday, the agreement’s details will be filed “shortly” with the United States Bankruptcy Court in Delaware.
Ray, one of the liquidators, and the liquidators’ attorneys did not respond to a request for comment.
On January 3, Bankman-Fried was arrested on fraud charges and pleaded not guilty. Ray stated that the exchange lost $8 billion in customer funds and that the bankruptcy team is working to recover assets to repay creditors.
(Adapted from ThePrint.com)