Bahamian government agrees with FTX to bring bankruptcy to US

The liquidators appointed by the Justice of the Bahamas to supervise the bankrupt estate of FTX in the country agreed to transfer the process that had already been opened in New York to Delaware, where the brokerage filed for bankruptcy protection.

FTX Trading Ltd. filed for Chapter 11 bankruptcy (similar to bankruptcy in Brazil) in the US Bankruptcy Court for the District of Delaware on Nov. 11, but the liquidators of Bahamas-based FTX Digital Markets later filed in the Southern District of New York. At the time, liquidators said FTX was not allowed to file for bankruptcy in the US.

According to specialists, the unification of bankruptcy proceedings in a single jurisdiction can be beneficial for investors around the world (such as Brazilians), as they have more chances of entering the company’s global list of creditors.

Before reaching an agreement on the transfer of the case, FTX tried to ask the Justice that the process of the unit in the Bahamas not go to the US, and that the action sought the international insolvency of the group.

“We have filed with Your Excellency a motion to transfer this case from the Southern District of New York to the District of Delaware, and we are pleased to report that we have reached an agreement with the Joint Provisional Liquidators to bring the case from New York to Delaware,” said James Bromley, a partner in the Finance and Restructuring Group at Sullivan & Cromwell, during FTX’s first bankruptcy hearing on Tuesday.

The deal, however, does not necessarily mean that FTX is contributing to Bahamian regulators. In opposition to the liquidators’ request, FTX said it had evidence that the Bahamian government had gained unauthorized access to the brokerage’s assets after it filed for bankruptcy.

Bromley reiterated at yesterday’s hearing that FTX was in possession of evidence showing that “there was movement of assets from the debtors’ properties to the Bahamas.” He added that there were “somewhat cryptic comments that have been issued by the Bahamian government regarding the actions they have taken with respect to certain assets.”

The Bahamas Securities and Exchange Commission announced last week that it ordered FTX cryptocurrencies to be transferred to government-controlled wallets on November 12 – the date coincides with the disappearance of $600 million worth of crypto from FTX accounts.

“It is essential to keep in mind that as we move forward in dealing with any of these foreign entities, and with respect to any regulators or liquidators that may be appointed, we are focusing on a single word, and that is reciprocity,” said Bromley.

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