# FTX U.S. judge expresses doubts about parallel Bahamian bankruptcy Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-06-09 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: FTX U.S. Judge Questions Bahamian Bankruptcy Amid Dispute Meta Description: FTX U.S. bankruptcy judge expresses skepticism about Bahamian court ruling in ongoing dispute over control of assets and customer repayments. URL: https://financedigest.com/ftx-u-s-judge-expresses-doubts-about-parallel-bahamian-bankruptcyhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-06-08t211549z2lynxmpej570s1rtroptp4fintech-crypto-ftx-1736813916319-compressed.jpg) # FTX U.S. judge expresses doubts about parallel Bahamian bankruptcy By Dietrich Knauth NEW YORK (Reuters) – The judge overseeing FTX’s U.S. bankruptcy said Thursday that he would not defer to a Bahamian court about key issues like which FTX entity should collect assets and repay customers of the bankrupt [crypto exchange](https://www.financedigest.com/analysis-us-sec-crackdown-on-coinbase-binance-puts-crypto-exchanges-on-notice.html "Analysis-US SEC crackdown on Coinbase, Binance puts crypto exchanges on notice"). Liquidators for FTX [Digital Markets](https://www.financedigest.com/digital-inclination-to-drive-the-cardiac-marker-analyzer-market.html "Digital Inclination to drive the Cardiac Marker Analyzer Market"), the exchange’s Bahamas-based subsidiary, have asked U.S. Bankruptcy Judge John Dorsey to let them seek a ruling from the Bahamas Supreme Court that their [company controlled FTX.com’s crypto](https://www.financedigest.com/steemit-announces-new-vp-of-marketing-to-take-the-company-from-crypto-to-consumer.html "Steemit Announces New VP of Marketing to Take The Company From Crypto to Consumer") exchange for international customers. FTX’s U.S. bankruptcy team seeks to block the Bahamas litigation, [calling it a power](https://www.financedigest.com/eu-lawmakers-call-for-summit-to-control-very-powerful-ai.html "EU lawmakers call for summit to control ‘very powerful’ AI") grab that would derail the company’s ongoing efforts to repay customers. Dorsey questioned the value of a Bahamian court ruling during a Thursday court hearing in Wilmington, Delaware, [saying that he would retain authority over the $7 billion](https://www.financedigest.com/rio-tinto-says-output-from-2-4-billion-serbia-lithium-project-to-be-delayed.html "Rio Tinto says output from .4 billion Serbia lithium project to be delayed") in assets recovered by the U.S. debtors no matter what the Bahamian [court rules](https://www.financedigest.com/slipping-over-mexico-border-migrants-get-the-jump-on-u-s-court-ruling.html "Slipping over Mexico border, migrants get the jump on U.S. court ruling"). Both courts would have to sign off before any assets transfer from the U.S. to the Bahamas, Dorsey said. It doesn’t go to FTX Digital until I [say](https://www.financedigest.com/ftx-collapse-shows-urgent-need-to-finalise-eu-crypto-rules-says-european-commission.html "FTX collapse shows urgent need to finalise EU crypto rules, says European Commission") it goes to FTX Digital,” Dorsey said. So what are we gaining by having two parallel [proceedings in two separate courts?”](https://www.financedigest.com/sri-lanka-top-court-allows-proceedings-against-former-president-rajapaksa-others.html "Sri Lanka top court allows proceedings against former President Rajapaksa, others") Chris Shore, an attorney for the Bahamian liquidators, said that a Bahamas court ruling would clarify each side’s responsibilities and provide a framework for cooperation between the U.S. bankruptcy case and involuntary insolvency proceedings in the Bahamas. The Bahamian insolvency case began one day before FTX Trading and more than 100 affiliates filed for bankruptcy protection in Delaware to address claims that the company misused and lost billions in [customers’ crypto](https://www.financedigest.com/crypto-broker-genesis-owes-geminis-customers-900-million-ft.html "Crypto broker Genesis owes Gemini’s customers 0 million – FT") deposits. Dorsey said he would make a final ruling Friday, and he encouraged the two sides to try to reach an agreement on the dispute overnight. The sides offered very different descriptions of how important [FTX Digital was to the crypto](https://www.financedigest.com/behind-ftxs-fall-battling-billionaires-and-a-failed-bid-to-save-crypto.html "Behind FTX’s fall, battling billionaires and a failed bid to save crypto") exchange’s operations. The Bahamian liquidators argue that FTX Digital took on a central role when the FTX companies moved their headquarters to the Bahamas from [Hong Kong](https://www.financedigest.com/evergrande-winding-up-lawsuit-in-hong-kong-adjourned-to-nov-7.html "Evergrande winding-up lawsuit in Hong Kong adjourned to Nov 7") in 2021, ultimately taking responsibility for all of FTX’s non-U.S. customers. A court ruling in their favor could place the Bahamian company, and not the U.S. debtors, in charge of collecting [assets and deciding how to distribute them to FTX customers](https://www.financedigest.com/why-equipment-assets-should-be-the-source-of-your-customer-strategy.html "Why Equipment Assets Should Be The Source of Your Customer Strategy"). FTX’s U.S.-based bankruptcy team argues that the Bahamian affiliate was a “corporate shell” and the “centerpiece” of founder Sam Bankman-Fried’s effort to funnel FTX customer deposits “out of the reach of [American regulators](https://www.financedigest.com/american-igaming-and-sports-betting-is-on-the-rise-with-new-investments-and-regulations-2022-predictions.html "American iGaming and Sports Betting is on the rise with new investments and regulations – 2022 predictions") and courts. FTX founder Bankman-Fried and several company insiders have been indicted on fraud charges for their role in the company’s collapse. In contrast to Bankman-Fried’s not-guilty plea, the former members of his inner circle have pleaded guilty and agreed to cooperate with prosecutors. The case is FTX Trading, U.S. [Bankruptcy Court](https://www.financedigest.com/blockfi-tells-u-s-bankruptcy-court-it-is-the-antithesis-of-ftx.html "BlockFi tells U.S. bankruptcy court it is ‘the antithesis of FTX’") for the District of Delaware, No. 22-11068. For FTX: Andy Dietderich, Brian Glueckstein and James Bromley of Sullivan & Cromwell For the Bahamian liquidators: Chris Shore of White & Case (Reporting by Dietrich Knauth) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---