After Bitter Fighting, U.S. and Bahamas Agree to Cooperate over FTX's Bankruptcy
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After Bitter Fighting, U.S. and Bahamas Agree to Cooperate over FTX's Bankruptcy

Created 10mo ago, last updated 10mo ago

In other developments, former FTX US president Brett Harrison is vowing to share what he knew, and the exchange's new management wants charitable donations to be returned.

After Bitter Fighting, U.S. and Bahamas Agree to Cooperate over FTX's Bankruptcy

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After weeks of bickering, teams in the U.S. and The Bahamas have agreed to cooperate in bankruptcy proceedings against FTX.

In a statement, it was confirmed both sides will work together as a Chapter 11 case continues in Delaware — with a provisional liquidation getting underway back in Nassau.

Unraveling what went down at Sam Bankman-Fried's doomed exchange has been complicated by the fact that the main business, FTX Digital Markets, was based in the Caribbean — with dozens of smaller subsidiaries scattered around the world. Meanwhile, bankruptcy lawyers in the U.S. have taken a prominent role in the restructuring process — with SBF extradited to New York after criminal charges were filed against him.

The cooperation agreement means that both parties will "work together to share information, secure and return property to their estates, coordinate litigation against third parties and explore strategic alternatives for maximizing stakeholder recoveries."

There will also be an effort to verify the value of the digital assets that have been seized by the Securities Commission of The Bahamas. Regulators there have previously valued this cryptocurrency at $3.5 billion, but FTX's new management argued that this included a substantial amount of FTT tokens, and a valuation of $167 million was more realistic.

FTX's new CEO John Ray III, who was previously tasked with cleaning up Enron, was even accused of having "a cavalier attitude towards the truth and towards The Bahamas" as the war of words between both sides became increasingly bitter.

Indicating that there may be a couple of things that the U.S. and The Bahamas still disagree on, Ray said in this new statement:

"There are some issues where we do not yet have a meeting of the minds, but we resolved many of the outstanding matters and have a path forward to resolve the rest."

A final hurdle concerns the fact that this cooperation agreement will need to be given the green light by the U.S. Bankruptcy Court in Delaware, and the Supreme Court in The Bahamas.

In Other Developments…

As ever, there are multiple strands to this exchange's bankruptcy that are unraveling in real time.

You may remember that the president of FTX US — Brett Harrison — had announced that he was stepping down from the role back in September 2022, weeks before the company went down in flames. Now, he's facing questions about how much he knew.

While opining on Twitter about why more tech startups don't go public and list on the stock market earlier, one of his followers jumped in and asked:

"What did you know about FTX US and when did you know it?"

Harrison replied by confirming that he'll "share in time" further information — but stopped short of confirming whether he's working with regulators and prosecutors.

Of course, several key FTX executives have already entered into plea deals — including Alameda Research's former CEO Caroline Ellison, and FTX co-founder Gary Wang. Their evidence is set to play a prominent role in the case against Sam Bankman-Fried. He has pleaded not guilty, and the trial date in New York has now been set for Oct. 2.

Elsewhere, prosecutors have set up a dedicated website for those who believe they were "a victim of fraud" by SBF — and those who get in touch will receive updates as the case unfolds.

It's also emerged that FTX's new management is currently attempting to recoup charitable donations that were made while Bankman-Fried was at the helm. This might be easier said than done, especially considering that some of these funds have already been spent.

The Wall Street Journal notes that all of this relates to Future Fund — the charitable arm established by what was once the world's second-largest exchange. A whopping $160 million had been pledged to over 110 nonprofits, the newspaper reported. While some of those who received a donation have expressed a desire to return this tainted money, FTX's new management is warning that action will be taken in bankruptcy court against those who fail to get in touch — with a view to forcing repayments plus interest.

SBF was a one-time poster child of effective altruism — and after cultivating a net worth of tens of billions of dollars, the 30-year-old had vowed to give most of it away to charity. But as FTX crumbled (alongside his vast fortune,) he admitted that some of his donations were nothing more than a PR exercise.

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