FTX Bankruptcy Resolution: U.S. and Bahamas Teams Coordinate Efforts

Coordination Between U.S. and Bahamian Teams

FTX's U.S.-based bankruptcy team has reached an agreement with Bahamian liquidators to coordinate efforts in winding down operations and recovering potentially billions in lost funds. This resolution aims to address disputes that arose from competing bankruptcy filings in the U.S. and the Bahamas, with the goal of optimizing asset recovery for creditors.

Background of the Dispute

The conflict began in November when the Securities Commission of the Bahamas initiated liquidation of FTX Digital Markets Ltd., a Bahamas-based unit. Simultaneously, a U.S. Chapter 11 proceeding was filed in Delaware, involving over 100 FTX entities, including FTX Trading and Alameda Research. Bahamian regulators seized FTX assets to protect them for creditors, which led to tensions over asset control and valuation.

Allegations and Accusations

John Ray, who assumed control of FTX post-resignation of founder Sam Bankman-Fried, accused Bahamian liquidators of conspiring with Bankman-Fried to undermine the U.S. bankruptcy case. Concerns were raised over asset transfers away from U.S. jurisdiction, leading to a refusal to share sensitive information with the Bahamian team.

Resolution and Ongoing Issues

The agreement signifies a cooperative approach moving forward, with both parties committed to sharing information and securing assets. Despite the resolution, some issues remain unresolved, and details of the agreement will be filed with the U.S. Bankruptcy Court in Delaware. The U.S. team has now acknowledged that the Bahamian assets are safeguarded appropriately, though the initial valuation discrepancy remains a point of contention.

Future Steps in Asset Recovery

Bankman-Fried, facing fraud charges, has pleaded not guilty. Meanwhile, Ray continues to lead efforts in recovering assets to repay creditors, with the bankruptcy team focused on resolving outstanding issues and optimizing asset recovery strategies.