Lawyers for the bankrupt crypto exchange FTX will square off in court on Wednesday to fight a demand for internal records from an insolvent affiliate based in the Bahamas as the two wrestle over scraps of the once high-flying business.
In Wednesday's emergency hearing,
liquidators of FTX's Bahamian business will ask U.S. Bankruptcy Judge John
Dorsey to give them access to the U.S. unit's Slack, Google and Amazon Web
Services accounts and data.
Lawyers for FTX asked Dorsey to deny the
request. They argued that Bahamian regulators had worked with FTX's founder,
the recently arrested Sam Bankman-Fried, to undermine the U.S. bankruptcy case
and withdraw assets to the detriment of some creditors.
FTX, its hedge fund Alameda Research and
dozens of affiliates filed for U.S. bankruptcy last month after the trading
platform suffered a rush of withdrawals and a rescue deal failed.
The same week, authorities in the Bahamas,
where the company had its headquarters, appointed liquidators to wind down
FTX's international trading business.
The dispute between FTX's U.S. bankruptcy
team and attorneys appointed to oversee the liquidation of Bahamas-based FTX
Digital Markets was aired in Congress on Tuesday.
John Ray, who was appointed as chief
executive of the bankrupt FTX, told a Congressional committee that the Bahamian
government colluded with Bankman-Fried to help account holders in the country
pull $100 million from the crypto exchange just as it was going bankrupt.
Ray called the Bahamian government's
actions "alarming" and suggested that people in the Bahamas have
something to hide.
"Unlike the Chapter 11 process, there
is no transparency in the process in the Bahamas," Ray said. "We have
repeatedly asked them for clarity on what they've been doing, and we've been
shot down on that."
The Securities Commission of The Bahamas
(SCB) disputed Ray's "misstatements" about the Bahamian government's
response to FTX's collapse.
Ray's recent court filings included a
partial record of emails between attorneys for the U.S. bankruptcy team and
Bahamian liquidators, creating "a false impression" that Bahamian
citizens were being protected at the expense of FTX's other customers, the SCB
said in a statement.
Any improper distributions made to Bahamian
citizens will be subject to the appropriate clawback actions under the law, the
SCB wrote.
Bankman-Fried was arrested Monday in the
Bahamas and is being detained while awaiting extradition to the United States
to face criminal and civil fraud charges.
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