As tensions over the bankruptcy increase, the Bahamas regulator defends FTX’s actions
In response to accusations that it acquired improper access to the systems of the bankrupt cryptocurrency exchange, FTX, the Bahamas’ financial authority has defended how it handled the company.
Bahamas regulator defends FTX actions as bankruptcy tensions mount
In a statement released on Wednesday, the Securities Commission of The Bahamas (SCB) said that John Ray, who succeeded Sam Bankman-Fried as CEO of FTX on Nov. 11, had distorted its “timely action” through “intemperate and incorrect charges.”
The SCB stated that Ray’s critical assessment of FTX’s management in Chapter 11 bankruptcy documents submitted on November 17 “reinforces the prudence of the Commission’s timely action to secure these digital assets.”
— Securities Commission of The Bahamas (@SCBgov_bs) November 24, 2022
The announcement comes as efforts are being made to combine various FTX-related bankruptcy processes. FTX Trading Ltd. requested that the Chapter 15 bankruptcy proceedings currently taking place in New York be moved to Delaware in a filing on November 17. The company’s subsidiary in the Bahamas, FTX Digital Markets Ltd., made the request after applying for Chapter 15 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York.
According to “foreign proceeding” law, which applied to that file, the debtor’s assets and business are now under the jurisdiction of a foreign court. The SCB had on November 10 provisionally liquidated FTX’s Bahamas branch.
Court-appointed liquidators for FTX in the Bahamas agreed earlier this week to shift the bankruptcy case to Delaware, which is a positive development. Yet there are still issues between those in charge of FTX at the moment and the Bahamas’ government.
According to the transfer request, FTX has “credible evidence that the Bahamian government is responsible for directing unauthorized access to the Debtors’ systems for the purpose of obtaining digital assets of the Debtors — that took place after the commencement of these cases,” calling the Chapter 15 proceeding into “serious question.”
The SCB expressed worry in its most recent statement about the Chapter 11 debtors’ decision to depend on the testimony of people they described as dubious sources of information and perhaps “seriously contaminated.”
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