FTX’s US bankruptcy administration team has reached an agreement with the liquidators shutting down the crypto exchange’s operations in the Bahamas to coordinate their efforts and exchange information, resolving a dispute that threatened the recovery of what could be thousands. of millions of dollars in lost funds.
In a joint statement on Friday, the two parties said they “will work to share information, secure assets and restore estate, and coordinate litigation against third parties.” Likewise, they will establish strategies to maximize the reimbursement of funds to investors. FTX’s US bankruptcy team has been at loggerheads with Bahamian authorities since November, when bankruptcy filings were filed in both countries.
The Bahamas Securities and Exchange Commission initiated liquidation proceedings against FTX Digital Markets, the Bahamas-based company’s subsidiary, on November 10. The next day, Delaware filed for bankruptcy in the United States (so-called Chapter 11), which included more than 100 FTX entities, including FTX Trading and the Alameda Research cryptocurrency hedge fund.
Bahamian regulators have seized FTX’s assets, which bankruptcy officials say was intended to safeguard the assets that will ultimately be returned to FTX Digital Markets’ creditors. John Ray, who took over FTX after founder Sam Bankman-Fried resigned in November, had accused Bahamian liquidators of siding with the disgraced founder to undermine the US bankruptcy case and move assets to the Bahamas.
Ray’s lawyers had rejected the liquidators’ demand for access to internal systems and to Slack and email accounts, saying they “did not trust” the Bahamas affiliate’s use of that information and that it could be used to divert assets from the US bankruptcy team.
Bahamian securities regulators accused Ray of showing “disdain” in his remarks about the forfeiture of assets in the Bahamas.
The US team has also questioned the size of the Bahamian assets that were seized, saying they were worth $296 million in November, not $3.5 billion as estimated by liquidators. The joint statement said that the US team is convinced that the assets were properly protected.
Ray noted that there are still some issues to be resolved to finalize the final settlement with the Bahamian liquidators. Friday’s statement said details of the deal will be filed “shortly” with the US Bankruptcy Court in Delaware.
Bankman-Fried was arrested and pleaded not guilty to the fraud charges on January 3. Ray has said that the cryptocurrency platform lost $8 billion of client money, adding that the bankruptcy team is focused on asset recovery to pay off creditors.