Liquidators Object to FTX Subsidiary’s Bankruptcy

Liquidators in the Bahamas dealing with the collapse of crypto exchange FTX say they “reject the validity” of the company’s bankruptcy proceedings in the U.S.

That’s according to a report by Reuters Wednesday (Nov. 16), citing court documents. That filing from the liquidators followed the company’s Bahamas subsidiary FTX Digital Markets’ bankruptcy filing Tuesday in U.S. federal court.

According to Reuters, the liquidators say this case could impact FTX’s attempt to reorganize. PYMNTS reached out to FTX for comment.

The failed crypto exchange, which is headquartered in the Bahamas, filed for bankruptcy protection last week for itself and several of its companies as its debts have left it dealing with what could be more than 1 million creditors.

On Tuesday (Nov. 15), the Securities Commission of the Bahamas announced the appointment of liquidators for the company.

“Given the magnitude, urgency and international implications of the unfolding events with regard to FTX, the commission recognized that it had to, and moved swiftly to use its regulatory powers..to further protect the interests of clients, creditors and other stakeholders globally of FTX Digital Markets Ltd. (FDM),” the commission said in a news release.

But FTX and its founder Sam Bankman-Fried aren’t just facing civil action. As PYMNTS reported Tuesday, authorities in the U.S. and the Bahamas have discussed bringing Bankman-Fried to the U.S. for questioning.

The former CEO has been cooperating with Bahamian authorities and was interviewed by the island nation’s police last weekend.

Bankman-Fried took to Twitter Tuesday, writing — as part of a longer thread — that his “one goal” was to do right by FTX customers.

“I’m contributing what I can to doing so. I’m meeting in-person with regulators and working with the teams to do what we can for customers. And after that, investors. But first, customers.”

That may have been a confirmation of reports that Bankman-Fried and a few remaining FTX employees spent the weekend trying to find investors to make up an $8 billion shortfall to repay the exchange’s customers.