Liquidators to go after FTX Bahamas payouts


Tribune Business Editor


The joint provisional liquidators for FTX’s Bahamian subsidiary are “guaranteed” to go after any payouts to local investors if they violated the Supreme Court freeze imposed as the crypto exchange imploded, it was revealed yesterday.

Well-placed sources, speaking on condition of anonymity, told Tribune Business that the trio overseeing FTX Digital Markets will certainly pursue the recovery of such payments after Sam Bankman-Fried, the embattled exchange’s chief executive, admitted he prioritised withdrawals for Bahamas-based investors to avoid being hunted by crowds of angry locals.

The confirmation came as the joint provisional liquidators, Brian Simms KC, the Lennox Paton senior partner, and PricewaterhouseCoopers (PwC) accounting duo, Kevin Cambridge and Peter Greaves, said in a statement that efforts to secure and recover assets for the benefit of FTX Digital Markets creditors have been “hampered” by the inability to access the company’s books and financial records.

Revealing that these were stored on “cloud-based servers”, the three said they were working to “re-establish access” to documents that will give them a complete picture of the Bahamian subsidiary’s financial health when it was placed into provisional liquidation by the Supreme Court on November 10, 2022.

Acknowledging that “significant uncertainty” surrounds the outcome of FTX Digital Markets’ provisional liquidation, but that those of its 40-strong local staff who have not resigned remain employed, the joint provisional liquidators also served notice of their intent to negotiate an information-sharing protocol with John Ray, chief executive of the 134 FTX companies in Chapter 11 bankruptcy protection in the US, in a bid to avoid a costly battle for control and assets.

“Since their appointment by the Supreme Court, the joint provisional liquidators have been reviewing the financial position of FTX Digital, investigating the causes of the collapse of FTX globally and its impact on FTX Digital, seeking to identify and secure assets, and investigating all paths available to the company with a view to realising the maximum possible value for FTX Digital stakeholders. This work is ongoing,” the trio’s statement said.

“As previously disclosed, the work of the joint provisional liquidators has been hampered by the joint provisional liquidators’ lack of access to FTX Digital’s own books and records, particularly customer information, stored on cloud-based servers. The joint provisional liquidators are seeking to re-establish access to FTX Digital’s books and records. This includes an application to seek recognition of the provisional liquidation of FTX Digital in the US under Chapter 15.”

Mr Ray has already succeeded in having that Chapter 15 action moved from the southern New York bankruptcy court to Delaware - a move that was ultimately consented to by the Bahamian joint provisional liquidators. The latter’s statement also indicated they still hope to avoid a costly and protracted battle for control of FTX’s restructuring and/or liquidation, and assets, with Mr Ray.

“Additionally, the joint provisional liquidators intend to enter discussions with the debtors in possession under the Chapter 11 proceedings in the US in order to seek to agree a protocol whereby, amongst other matters, information may be shared,” the trio added, while acknowledging their co-operation with the Securities Commission and the regulator’s efforts to secure assets belonging to FTX Digital Markets clients.

“There remains significant uncertainty around the outcome of proceedings involving FTX Digital,” the joint provisional liquidators said. “As of the date hereof, the joint provisional liquidators confirm that they have not made any redundancies and that employees who remained in the employment of FTX Digital as at the date of the provisional liquidation Order, and have not resigned or indicated their intention to resign, will continue to be retained by FTX Digital until further notice.

“The joint provisional liquidators are focused on addressing FTX Digital employee issues and concerns, and would like to thank the employees for their ongoing understanding and co-operation.” The three joint provisional liquidators’ statement came as a visibly nervous Mr Bankman-Fried yesterday made one of his first public appearances since FTX’s spectacular implosion at the New York Times’ DealBook Summit.

The appearance, likely a nightmare for his attorneys given the possibility of charges being brought against him in the US and elsewhere, saw Mr Bankman-Fried at times seem in denial about the crypto exchange’s plight and the fact he will have no say in whether it is restructured, sold-off in whole or in part, or is fully wound-up. He again seemed to suggest that its US operation was still liquid, and that he wanted to help make FTX’s one million-plus clients “whole”.

This was interspersed with more admissions and ‘mea culpas’ as Mr Bankman-Fried took much of the blame for FTX’s failure. Admitting that he and the crypto exchange “completely failed on risk management”, he added: “There was no person in charge of positional risk on FTX.” However, he denied that any criminal or improper conduct, such as fraud, ever took place.

Asked why FTX bought so much Bahamian real estate, whose collective worth has been estimated as high as $300m, Mr Bankman-Fried said: “We wanted to incentivise people to move here so we gave them a comfortable environment.” The FTX chief said he was also no longer resident in the crypto exchange’s $30m penthouse, but hinted he was still in The Bahamas - possibly at the $2m One Cable Beach penthouse said to have been acquired in his name.

Meanwhile, well-placed contacts yesterday confirmed that the joint provisional liquidators will go after Bahamians and local residents who may have been able to withdraw their funds from FTX in violation of the Supreme Court freezing Order imposed on November 10 as these could be considered “fraudulent preferences” that have such investors an unfair advantage over others. This is especially if FTX Digital Markets goes into full liquidation.

Mr Bankman-Fried, in a November 16 interview with a You Tube personality, alleged that he gave the Securities Commission a “heads up” that he planned to prioritise Bahamian withdrawals and payouts but never got a response either way. He added that it was done because “you do not want to be in a country with a lot of angry people in it”.

This newspaper previously confirmed that some clients of FTX Digital Markets were able to retrieve their assets - which the crypto exchange was holding for them on trust or in escrow, in a fiduciary capacity - starting around the time that the Supreme Court issued its Order shutting down all local operations.

FTX, in a Twitter tweet sent out at 2.08pm on Thursday, November 10, barely hours before the Securities Commission’s announcement of the asset freeze and provisional liquidator’s appointment, wrote: “Per our Bahamian HQ’s (FTX Digital Markets) regulation and regulators, we have begun to facilitate withdrawals of Bahamian funds. As such, you may have seen some withdrawals processed by FTX recently as we complied with the regulators.

“The amounts withdrawn comprise a small fraction of the assets we currently hold on hand, and we are actively working on additional routes to enable withdrawals for the rest of our user base. We are also actively investigating what we can and should do across the world.”

This assertion, and the subsequent fall-out, eventually prompted the Securities Commission to clarify that it had not given FTX Digital Markets permission to release customer funds or prioritise/give preference to Bahamian clients. In a statement issued more than 48 hours after FTX’s original tweet, it warned that such payments would be treated as “voidable preferences” and likely subject to being “clawed back” by the provisional liquidator.


ohdrap4 1 year, 5 months ago

admitted he prioritised withdrawals for Bahamas-based investors to avoid being hunted by crowds of angry locals.

When Bain town woman catch a fire, even the devil run. you better run, SBF.


ThisIsOurs 1 year, 5 months ago

Sam lives in Albany, what angry locals does he come into contact with?? And if he's so aftaid, call the US Embassy Im sure theyll be happy to give him a first class ticket back to the US, Full military escort if he wants


GodSpeed 1 year, 5 months ago

lol good luck getting that money back, if that even happened. Wouldn't be getting my money if it was me.


TalRussell 1 year, 5 months ago

Well, hell no.

You wouldn't' wanna upset crowds of in emotional distress angry natives', — Yes?


TalRussell 1 year, 5 months ago

Well, yes.    The Revolution with Talk Radio Presenter, Journalist Comrade Juan "Mr. Carmichael's" confusing stance be questioning what he describes as **those peoples" who demands that..

The Recipients of ill gotten** monies in whatever form or manner, are obligated to return proceeds which never was Sam Bankman-Fried to dish out.

It was/is/ still remains the now collapsed Crypto Exchange's clients' monies, — Yes?


tribanon 1 year, 5 months ago

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