FTX Reaches Agreement With Bahamas Liquidators on Asset Recovery

According to a press statement on Friday, FTX’s U.S. management and the liquidators for Bahamas operations have created a cooperation agreement covering the possible inventory and sale of assets.

FTX Trading, the firm behind FTX.com, filed for bankruptcy in the U.S. last November, and FTX Digital Markets entered liquidation the same month. In recent weeks, joint temporary liquidators in the Bahamas and FTX Trading’s U.S. leadership argued over jurisdictional issues. FTX filed for bankruptcy alongside hundreds of subsidiaries and affiliated businesses in many countries. So far, the U.S. and Bahamas have led the bankruptcy process.

FTX Trading’s lawyers argued in a U.S. bankruptcy court that the judge should deny the liquidators access to FTX’s Amazon and Google cloud services and other IT tools.

The government and liquidators of The Bahamas have also taken issue with how Ray and his team in the United States have handled the bankruptcy, arguing that the allegation regarding minting tokens is false and opposing the U.S. proceedings in their entirety.

FTX’s US debtors, who are in Chapter 11 bankruptcy, and the joint provisional liquidators who are overseeing the winding up of FTX Digital Markets (FTX DM) in The Bahamas are once again working to reach an agreement over access to the exchange’s data. https://t.co/0ftWQesqni

— Nassau Guardian (@GuardianNassau) January 5, 2023

Even the valuation of the Bahamas’ assets has been a point of contention between the two sides. FTX Trading has denied the Securities Commission of the Bahamas’ claim that it has secured $3.5 billion worth of customer assets at FTX. This Thursday, the commission responded by saying FTX’s number was a “material misstatement.”

FTX CEO John Ray III stated in a statement released on Friday that his company had constructive meetings with the joint provisional liquidators this week in Miami. They have handled many unresolved topics and have a route ahead to resolve the remainder.

Similarly, one of the liquidators, Brian Simms, expressed excitement about collaborating with the U.S. bankruptcy administrators.

All parties agreed to exchange information, protect and return the property to their estates, coordinate action against third parties, and explore strategic alternatives to maximise shareholder recovery, as stated in the announcement.

According to the statement, FTX Trading will be involved in liquidation processes in the Bahamas, while FTX Digital Markets will be involved in bankruptcy proceedings in the United States.

The liquidators will be in charge of selling any FTX-related property, but the sale will be subject to review by the bankruptcy court in the United States and the Supreme Court in the Bahamas. In addition, both courts will be involved in validating “the inventory of digital assets” managed by the Securities Commission of the Bahamas.

The cooperative agreement requires the approval of both courts, the statement stated. In Delaware, a bankruptcy court was scheduled to have a hearing on some of these jurisdictional problems on Friday morning, but it was postponed until January 13.