Bahamas May Have Directed 'Unauthorized' FTX Transactions, Filing Says

The exchange says it has credible evidence the Bahamas directed unauthorized access to its systems after it filed for bankruptcy in the U.S.

AccessTimeIconNov 17, 2022 at 2:40 p.m. UTC
Updated Nov 18, 2022 at 6:57 p.m. UTC
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Bankrupt crypto exchange FTX is accusing the government of the Bahamas of directing unauthorized access to FTX's systems in order to withdraw assets after the company filed for Chapter 11 bankruptcy in the U.S., court filings from Thursday show.

The document, filed in the U.S. Bankruptcy Court for the District of Delaware, didn't specify which transactions were unauthorized or how they occured.

The accusation was included in a document challenging a complaint filed in a New York court by the Bahamian liquidators tasked with overseeing FTX's assets. The liquidators, in their chapter 15 filing, which apply to bankruptcy cases that require cooperation between U.S. and foreign courts, had asked the U.S. court to turn over control of the proceedings to the Bahamas, where the crypto enterprise had its headquarters.

FTX's Thursday filing asked the court to order the transfer of the chapter 15 case from the New York court to Delaware in a bid to "end the chaos" surrounding the complex proceedings involving FTX's numerous entities seeking bankruptcy protection, so that all proceedings could "take place in a single venue."

Despite FTX's desire to end the chaos, its accusations against the Bahamian government stand to add fresh disorder to the proceedings.

The debtors “have credible evidence that the Bahamian government is responsible for directing unauthorized access to the debtors’ systems for the purpose of obtaining digital assets,” after legal proceedings began in the U.S. last Friday, the filing attributed to FTX Trading said.

"It appears that the automatic stay has been flaunted, by a government actor no less," the filing added, referring to the bankruptcy norms that require a freezing of assets until they can be divided up to creditors.

The filing cites "recorded and verified texts" from former FTX CEO Sam Bankman-Fried and co-founder Gary Wang that were made in connection with an investigation into a hack that occurred over the weekend following the bankruptcy filing.

UPDATE (Nov. 17, 15:28 UTC): Adds more details throughout article.

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Jack Schickler

Jack Schickler was a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.

Sandali Handagama

Sandali Handagama is CoinDesk's deputy managing editor for policy and regulations, EMEA. She does not own any crypto.


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