- FTX seeks to exclude the company’s Bahamian unit from any claim over company assets, according to a legal filing.
- FTX DM was not crucial to the operations of the company but was established in May 2022 and served as an offshore haven for an ongoing fraudulent scheme.
According to a legal filing on 19 March, FTX seeks to exclude the company’s Bahamian unit from any claim over company assets, claiming that it was a mere shell set up to further alleged fraud by founder Sam Bankman-Fried “SBF.”
The filing accuses Bahamian authorities of assisting SBF’s efforts to avoid prosecution. The accusation can, in all likelihood, rekindle legal and diplomatic tensions between the U.S. and the Bahamas.
The Bahamas courts placed the FTX’s Bahamas arm, FTX Digital Markets (FTX DM), into liquidation on 10 November, and the larger group filed for bankruptcy in Delaware the next day. It created a perplexing situation that has already resulted in disagreements over who has access to corporate data held centrally.
FTX, now led by restructuring expert John J. Ray III, asked in its recent filing that Delaware courts should completely strip Bahamas liquidators of any powers, ruling that FTX DM is an economic and legal “nullity” with no legitimate fiat, crypto, or intellectual property to resolve.
According to the filing, FTX DM was not crucial to establishing the operations of the company but in May 2022 and served as an offshore haven for an ongoing fraudulent scheme. The filing also mentions $143 million transferred to FTX DM bank accounts.
SBF had a close relationship with Bahamian agencies
According to the filing, SBF and other FTX executives maintained a close relationship with Bahamian law enforcement agencies, including the Prime Minister, Attorney General, and Securities Commission. It also states that the FTX founder intended to use that relationship to reduce his criminal and civil term if the massive fraud was discovered.
SBF has declared innocence to wire fraud charges stemming from his time as the CEO of FTX. Other former executives have entered guilty pleas to criminal charges. The Bahamas Securities Commission and liquidators have not issued any comment on the matter as of now.
The Bahamian regulator had previously stated that Ray’s public comments demonstrate a “cavalier attitude to the truth.” However, Ray and the Bahamian liquidators came to an understanding to cooperate in January.