US lawyers accuse FTX founder of syphoning off company assets
‘Bahamas authorities said the court allowed for transfer all of the assets of FTX to its custody for safekeeping’
‘US lawyers pointed to post-petition transfers made while Bankmanfried was in Bahamian custody’
THE disgraced founder of FTX, the collapsed cryptocurrency exchange business, has been accused of trying to syphon assets from the company to the Bahamas.
Lawyers handling the bankruptcy filed an emergency motion on Thursday night, alleging that Sam Bankman-fried was trying to “undermine” the court process and “move assets from the debtors to accounts under the control of the Bahamian government”.
It comes amid a brewing legal battle over jurisdiction of the bankruptcy between United States and Bahamian authorities.
The FTX exchange, founded by Mr Bankman-fried, 30, filed for bankruptcy protection in the state of Delaware last week, leaving up to 1m creditors out of pocket and an $8bn (£7bn) black hole in its accounts.
The company, which was run out of a $40m penthouse in the Bahamas, failed after executives secretly used billions in customer deposits to fund risky trades at a crypto hedge fund. Earlier this year it had been valued at $32bn.
The bankruptcy case in the US is being handled by John Jay Ray, a restructuring veteran who oversaw the unwinding of failed energy giant Enron.
However, on Wednesday the Bahamas unit of FTX filed a separate bankruptcy motion on behalf of the country’s regulators in another court. It called for the US to recognise liquidation proceedings on the Caribbean island.
The Bahamas Securities Commission said on Thursday it had used powers granted by its supreme court to “transfer all of the assets of ” FTX’S Bahamas division to its own custody for “safekeeping”.
In response, lawyers working with Mr Ray accused the Bahamas of securing “unauthorised access” to the company’s systems “for the purpose of obtaining digital assets”.
Hundreds of millions of dollars in FTX’S cryptocurrency tokens were transferred out of the company in the wake of its US bankruptcy filings.
FTX’S lawyers claimed that on Nov 13, two days after filing for bankruptcy in the US, “certain post-petition transfers” were made by Mr Bankman-fried from its assets to accounts controlled by Bahamian authorities. The lawyers added that Mr Bankman-fried appeared at the time to be “effectively in the custody of Bahamas authorities”.
FTX is facing multiple regulatory investigations by dozens of authorities in the US as well as inquiries by Bahamas regulators and police.
Lawyers acting for FTX accused the company’s founder of “incessant and disruptive tweeting” since the company was bankrupted. Mr Bankman-fried is still trying to raise up to $8bn to bail out the exchange, despite resigning as chief executive last week.
Legal filings claim Mr Bankmanfried also took a personal loan worth $1bn from Alameda, his cryptocurrency hedge fund that received funding from FTX customer accounts. He did not respond to a request for comment.