FTX Digital Markets, the Bahamas-based subsidiary of collapsed crypto exchange FTX, filed for Chapter 15 bankruptcy protection on Tuesday in the Southern District Court of New York.
The filing comes a day after the Supreme Court of the Bahamas approved provisional liquidators to oversee FTX Digital’s assets. Brian Simms of Lennox Paton was appointed as court-supervised provisional liquidator and Kevin Cambridge and Peter Greaves of PricewaterhouseCoopers were appointed as joint provisional liquidators.
“In compliance with section 1515(c) of the Bankruptcy Code, I hereby declare that, to my knowledge, the only foreign proceeding (as such term is defined in section 101(23) of the Bankruptcy Code) pending with respect to FTX Digital is the Bahamian Liquidation,” the filing, submitted by Warren Gluck of Holland & Knight LLP, counsel for the joint provisional liquidators of FTX Digital Markets, reads.
The Chapter 15 filing comes four days after FTX Trading and 134 other affiliates and subsidiaries (FTX Group) filed for Chapter 11 bankruptcy protection in the District Court of Delaware. Chapter 15 filing allows a foreign debtor to file for bankruptcy protection in the U.S. court system.
FTX Group collapsed last week amid a sudden liquidity crisis. The crypto exchange reportedly tapped customer assets to fund risky bets by its affiliated trading firm, Alameda Research, setting up its implosion. Last week, the Securities Commission of the Bahamas froze the assets of FTX Digital Markets and also suspended the firm’s registration.
The commission is also working closely with financial investigators to see if any criminal misconduct occurred at the company.
Despite bankruptcy protection filings and investigations, Sam Bankman-Fried, former CEO of FTX, still wants to raise funds. “So what can I try to do? Raise liquidity, make customers whole, and restart,” Bankman-Fried tweeted today. He said he may fail, but added, “part of me thinks I might get somewhere.”
Source: The Block