Liquidator Calls FTX’s US Bankruptcy Unauthorized, Files for Chapter 15
On November 15th, the Supreme Court-appointed liquidator of FTX, Brian Simms filed for chapter 15 bankruptcy in New York on behalf of the company. In the document, he calls the filing from November 11th unauthorized.
Bahaman Liquidator Files for Bankruptcy in New York
Brian Simms, who was appointed one of the provisional liquidators of FTX after Bahaman regulators froze the company’s assets, filed for chapter 15 bankruptcy on behalf of the firm. Chapter 15 is the section of the code that provides for cooperation between US and foreign courts in bankruptcy proceedings. In the filing, Simms notes that the November 11th filing has been unauthorized as all the included companies are under the Bahamas-registered FTX Digital Assets—and thus under his and his country’s jurisdiction. He did not, however, request the dismissal of chapter 11 bankruptcy.
Notably, FTX Digital is not part of the Delaware Petition. As of the date of the Delaware Petition, no person other than me, as Provisional Liquidator, was authorized to take any act including, but not limited to, filing the Delaware Petition, in connection with FTX Digital and FTX Digital’s subsidiaries to the extent the authority of FTX Digital’s directors and management was requisite. I did not authorize or approve — in writing or otherwise — any of FTX Digital’s officers, management or employees to file, or cause to be filed, the Delaware Petition. Based upon my years of experience practicing law in the Bahamas and infonnation that has been provided to me by inter alia the Securities Commission of The Bahamas, and pending further analysis, I reject the validity of any purported attempt to place FTX Affiliates in bankruptcy insofar as such filing required FTX Digital’s officers, directors, or management to approve and authorize such action.
According to some of the available information, FTX might have already been playing fast and loose with Bahaman law. Notably, the company cited the country’s regulations as the reason for processing certain withdrawals on November 10th. The Securities Commission of The Bahamas has since refuted these claims.
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The Collapse of FTX
The collapse of FTX started rapidly unfolding on Saturday, November 5th when Binance started moving almost $600 million in FTT to its platform. CZ later commented that this was a part of the liquidation of these tokens due to “recent revelations” and likened the situation to the LUNA collapse. The comments caused widespread FUD and saw customers withdraw more than $6 billion in 72 hours.
By Tuesday, November 8th, FTX approached Binance for help, but the deal fell through on Wednesday. Soon after, the FTX Empire crumbled as SBF announced he filed for the now-disputed chapter 11 bankruptcy. The collapse has caused an ongoing crisis in the crypto sector with a contagion of still undeterminable proportions looming and with the confidence in both digital asset companies and regulators deeply shaken.
Since the bankruptcy, Sam Bankman-Fried has taken to Twitter and a selection of outlets making claims that many have been calling bizarre and even unhinged. Most recently, the former CEO’s actions have comments have caused FTX to officially distance itself from him.
Do you think customers will see the return of at least some of their assets stuck on FTX? Let us know in the comments below.