FTX Seeks to Remove Turkish Units From Bankruptcy Case
The U.S. estate of the bankrupt crypto exchange doesn’t reckon the Turkish authorities will cooperate after they seized local assets in November.
Crypto exchange FTX is seeking to remove its Turkish units from the scope of its bankruptcy case, saying in a Friday court filing that Turkish authorities are unlikely to follow instructions from U.S. courts.
FTX filed for bankruptcy on Nov. 11 in Delaware, and its new owners are attempting to unwind the affairs of as many as 134 entities across the world.
Within days of the bankruptcy filing, Turkish law enforcement announced a probe into FTX's activities, and on Nov. 23, authorities ordered the seizure of virtually all FTX's assets in Turkey, making it fruitless to include them in wider restructuring plans, the new U.S. management said.
“The orders entered by this court do not have legal or practical effect in Turkey, and the debtors have no reason to believe that the Turkish government will comply with this court’s orders,” FTX said in the filing with the U.S. Bankruptcy Court in Delaware. “As a result, the debtors are unable to exercise sufficient control over the affairs of the Turkish debtors in order to comply with their duties under the bankruptcy code.”
The request concerns FTX Turkey, a local exchange 80% owned by parent company FTX Trading Ltd. and SNG Investments, a wholly owned subsidiary of FTX’s affiliated trading arm, Alameda Research. Both are described in the filing as “not strategic” within the corporate group, with assets and activities largely confined to Turkey.
The parent company can still take action under Turkish law, and some Turkish creditors have already started filing private claims in local courts, the filing said. CoinDesk has previously reported that staff often put their paychecks into the company because of their distrust of local banks and depreciation of the lira.
A hearing on the issue is schedule for March 8. Non-U.S. creditors of the exchange, fearing they may be overlooked by U.S. proceedings, have sought to ensure their representation in the case by forming a committee that can intervene on their behalf.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.