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US, Bahamas FTX Teams To Coordinate Fund Recovery Measures
(CTN NEWS) – To resolve a disagreement that may have prevented the recovery of potentially billions of dollars in lost funds, FTX‘s US-based bankruptcy team agreed to work with the Bahamas-based liquidators who are closing down the crypto exchange’s activities.
The two sides stated they would cooperate to share information, protect assets, and plan legal action against third parties in a joint statement released on Friday, Jan. 6.
Since dueling bankruptcies were filed in the two nations in November, FTX’s US bankruptcy team has been in conflict with Bahamian authorities.
The Bahamas-based division of the company, FTX Digital Markets, was the target of liquidation proceedings started by the Securities Commission of the Bahamas on November 10.
Sam Bankman-Fried, co-founder of FTX Cryptocurrency Derivatives Exchange, departs from court in New York on Dec. 22. Stephanie Keith / Bloomberg via Getty Images
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.
According to officials, authorities in the Bahamas have confiscated FTX assets, which was done to protect assets that will eventually be delivered to FTX Digital Markets’ creditors.
Because FTX Digital Markets is just a “local service firm” with few important creditors and no direct relationship to FTX’s cryptocurrency operation, the US team has claimed that those assets must be included in the US bankruptcy.
The US team has also challenged the value of the confiscated Bahamian assets, claiming they were only worth $296 million in November rather than US$3.5 billion.
READ ALSO: Former CEO Bankman-Fried Pleads Not Guilty In FTX Fraud Case
Former FTX chief executive Sam Bankman-Fried (C) arrives to enter a plea before US District Judge Lewis Kaplan in the Manhattan federal court, New York, January 3, 2023. – Bankman-Fried faces criminal fraud charges over the spectacular collapse of his crypto exchange. (Photo by Ed JONES / AFP) (Photo by ED JONES/AFP via Getty Images)
Sam Bankman-Fried, the company’s founder, left in November, and John Ray, who assumed leadership of the company and is in charge of managing its US bankruptcy, claimed there were still difficulties to be resolved in the agreement with the Bahamas-based liquidators.
A request for a response was not answered by Ray, one of the liquidators, or the liquidators’ lawyers.
Bankman-Fried was detained on suspicion of fraud on January 3 and entered a not-guilty
plea. According to Ray, the exchange misappropriated $8 billion in client funds; he also stated that the bankruptcy team is working to recover assets to compensate creditors.
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