FTX’s Bahamas Entity Files for Chapter 15 Bankruptcy Protection in the US: Report

FTX’s Bahamas unit – FTX Digital Markets Ltd – has filed for Chapter 15 bankruptcy seeking protection from creditors in the United States. Chapter 15 bankruptcy essentially enables a foreign debtor to file for bankruptcy in the US court system.

According to the report, the filing will allow provisional liquidators who can serve as foreign representatives a “broad discovery concerning the property and affairs of a debtor.”

• The filing also called the New York bankruptcy court to ratify the petition “recognizing the Bahamian Liquidation will assist the orderly administration of FTX Digital’s liquidation, consistent with the public policy of the United States that the Bankruptcy Code embodies.”
• The move comes less than a week after Sam Bankman-Fried’s digital-asset empire filed for Chapter 11 protection.
• Subsequently, the former crypto mogul was interviewed by Bahamian police and regulators.
• In the US, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are investigating whether FTX mishandled customer funds, as well as its relationship with sister entity Alameda Research and FTX US.
• The devastating collapse has prompted several entities to distance themselves from the now-bankrupt crypto exchange.
• Prominent NBA team – Golden State Warriors – announced its decision to halt marketing endeavors related to FTX. Payment behemoth Visa also terminated its debit card program with FTX.
• Lobbyists who worked for FTX and Guarding Against Pandemics, a non-profit organization partially funded by the former CEO and operated by his brother, Gabe Bankman-Fried, also severed ties with the crypto exchange after its implosion last week.
• Owing to the scandal, several lawmakers from both parties in the US are giving up campaign contributions from FTX’s top executives.