FTX to Argue In opposition to Bahamas Demand for Entry to Inner Data, Knowledge

Legal professionals for the bankrupt crypto change FTX will sq. off in courtroom on Wednesday to battle a requirement for inner information from an bancrupt affiliate based mostly within the Bahamas as the 2 wrestle over scraps of the as soon as high-flying enterprise.

In Wednesday’s emergency listening to, liquidators of FTX’s Bahamian enterprise will ask US Chapter Choose John Dorsey to provide them entry to the US unit’s Slack, Google and Amazon Net Companies accounts and knowledge.

Legal professionals for FTX requested Dorsey to disclaim the request. They argued that Bahamian regulators had labored with FTX’s founder, the not too long ago arrested Sam Bankman-Fried, to undermine the US chapter case and withdraw belongings to the detriment of some collectors.

FTX, its hedge fund Alameda Analysis and dozens of associates filed for US chapter final month after the buying and selling platform suffered a rush of withdrawals and a rescue deal failed.

The identical week, authorities within the Bahamas, the place the corporate had its headquarters, appointed liquidators to wind down FTX’s worldwide buying and selling enterprise.

The dispute between FTX’s US chapter group and attorneys appointed to supervise the liquidation of Bahamas-based FTX Digital Markets was aired in Congress on Tuesday.

John Ray, who was appointed as chief govt of the bankrupt FTX, instructed a Congressional committee that the Bahamian authorities colluded with Bankman-Fried to assist account holders within the nation pull $100 million from the crypto change simply because it was going bankrupt.

Ray known as the Bahamian authorities’s actions “alarming” and recommended that folks within the Bahamas have one thing to cover.

“Not like the Chapter 11 course of, there isn’t any transparency within the course of within the Bahamas,” Ray mentioned. “Now we have repeatedly requested them for readability on what they have been doing, and we have been shot down on that.”

The Securities Fee of The Bahamas (SCB) disputed Ray’s “misstatements” in regards to the Bahamian authorities’s response to FTX’s collapse.

Ray’s current courtroom filings included a partial document of emails between attorneys for the US chapter group and Bahamian liquidators, creating “a misunderstanding” that Bahamian residents have been being protected on the expense of FTX’s different prospects, the SCB mentioned in an announcement.

Any improper distributions made to Bahamian residents can be topic to the suitable clawback actions underneath the regulation, the SCB wrote.

Bankman-Fried was arrested Monday within the Bahamas and is being detained whereas awaiting extradition to the US to face prison and civil fraud fees.

© Thomson Reuters 2022