{"id":20259,"date":"2023-03-20T18:18:33","date_gmt":"2023-03-20T22:18:33","guid":{"rendered":"http:\/\/cryptocornercafe.com\/cafe\/?p=20259"},"modified":"2023-03-20T19:15:24","modified_gmt":"2023-03-20T23:15:24","slug":"ftx-debtors-file-lawsuit-against-exchanges-bahamian-arm-on-ownership-of-property","status":"publish","type":"post","link":"http:\/\/cryptocornercafe.com\/cafe\/2023\/03\/20\/ftx-debtors-file-lawsuit-against-exchanges-bahamian-arm-on-ownership-of-property\/","title":{"rendered":"FTX debtors file lawsuit against exchange's Bahamian arm on ownership of property"},"content":{"rendered":"
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The legal teams representing Alameda Research, FTX US and FTX Trading have filed a complaint against the Bahamas-based FTX Digital Markets, claiming the company was a \u201cfraudulent enterprise\u201d used as a shell entity to obfuscate the question of the firm\u2019s ownership.<\/p>\n

In a March 19 filing with the United States Bankruptcy Court for the District of Delaware, FTX debtors say FTX Digital Markets (FTX DM) and the joint provisional liquidators (JPLs) had claimed the Bahamian arm was the \u201cconstructive owner\u201d of FTX.com\u2019s fiat and crypto assets as well as other intellectual property. According to the complaint, these \u201cbaseless claims\u201d by FTX DM \u201cwill harm FTX.com customers and all other creditors of the FTX Debtors\u201d as the company continues with bankruptcy proceedings in the United States.<\/p>\n

\u201cThe JPLs\u2019 claim to ownership of FTX.com\u2019s property is based largely on constructive, equitable, and other non-documentary arguments that depend upon the false premise that FTX DM was the center of the FTX Group,\u201d says the filing. \u201cNothing could be further from the truth. FTX DM was no more than a short-lived provider of limited \u2018match-making\u2019 services for customer-to-customer transactions, on the cryptocurrency exchange built, owned, and operated by Debtor FTX Trading, its immediate corporate parent.\u201d<\/p>\n

The complaint alleges:<\/p>\n

\u201cFTX DM was an economic nullity within the FTX Group. FTX DM was a legal nullity as well. The peculiar history of FTX DM is a classic example of abuse of the corporate form. It was created as a front to facilitate a conspiracy to defraud the Debtors\u2019 customers.\u201d<\/p><\/blockquote>\n

As part of the court filing, the debtors seek a ruling that would assert that FTX DM had an \u201cownership interest\u201d in the property at the center of the bankruptcy case. In addition, the legal team cites former FTX CEO Sam Bankman-Fried\u2019s criminal and civil charges in the U.S., claiming he had connections with Bahamian authorities aimed at minimizing his \u201ccriminal and civil exposure should the massive fraud be discovered.\u201d<\/p>\n

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John Ray’s team is suing the Bahamas JPL (FTX Digital Markets)<\/p>\n

Essentially a dispute over who owns the main exchange.<\/p>\n

Disappointing they couldn’t have worked this out themselves and are now using creditor money on both sides for pointless lawyer battles. pic.twitter.com\/PYKoeTFmEz<\/a><\/p>\n

\u2014 FTX 2.0pium (FTX Creditor) (@AFTXcreditor) March 20, 2023<\/a><\/p><\/blockquote>\n

FTX Group filed for bankruptcy in the U.S. on Nov. 11, one day after the Securities Commission of the Bahamas\u00a0froze FTX DM\u2019s assets<\/a> and suspended the firm\u2019s registration. The country\u2019s supreme court later approved the appointments<\/a> of PricewaterhouseCoopers\u2019 Kevin Cambridge and Peter Greaves to act as provisional liquidators for the FTX DM case.<\/p>\n

Related: <\/em><\/strong>FTX liquidators report exchange held $2.4M \u2018fleet of vehicles\u2019 in the Bahamas<\/em><\/strong><\/a><\/p>\n

Bankman-Fried has pleaded not guilty to criminal charges in the U.S., while civil cases brought by federal financial regulators have been deferred<\/a> until after SBF\u2019s October trial. The former FTX CEO is currently free following a $250-million bail bond but has frequently appeared in court<\/a> to have the issue of bail revisited after it was discovered he used encrypted messaging apps and a virtual private network.<\/p>\n