FTX lawyers: Bankman-Fried undermines the restructuring

The former CEO is trying to avoid the US courts, while FTX's lawyers are denouncing him and trying to tidy up the mess.

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Cryptocurrency mogul Sam Bankman-Fried is undermining efforts to reorganize his collapsing empire with “incessant and disturbing tweets” that appear to be aimed at removing assets from the control of US courts in favor of authorities in the Bahamas, lawyers in the US have testified as part of an investigation into the bankruptcy of cryptocurrency exchange FTX.

Now under the control of John J. Ray III, a restructuring lawyer who oversaw the Enron liquidation, FTX has asked a federal judge in Delaware to transfer all relevant bankruptcy investigations from New York and the Bahamian liquidators to Delaware so that the proceedings can be consolidated under one court.

They also asked the Delaware judge to prevent “all persons and all governmental authorities” from taking action in any court in the world to seize assets or collect money from the company.

“Tremendous efforts are being made to bring some order to a chaotic environment,” FTX lawyers wrote in the bankruptcy filing. “It is critical to end the chaos, safeguard assets and gather assets in an orderly process.”

Liquidators in the Bahamas moved earlier this week to investigate the insolvency of FTX Digital Ltd, a subsidiary of Bankman-Fried’s crypto business. In their filing in New York, they asked a federal judge to argue their case in the Bahamas Supreme Court.

Bankman-Fried “appears to support the efforts” of the Bahamian liquidators “to expand the scope of the proceeding, undermine Chapter 11 actions and transfer assets to accounts under the control of the Bahamian government,” the lawyers wrote.

In his Twitter messages, Bankman-Fried, who is not having the best of days as he is being lambasted from all sides, criticised US regulators and called the decision to put FTX into bankruptcy a mistake. “Everything would be 70% fixed right now if I hadn’t done it,” he wrote.

“We can win the jurisdictional battle against Delaware,” he added.

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