FTX Trading Seeks To Remove Turkish Subsidiaries From US Bankruptcy Case Amid Fear Of Non-Compliance

FTX and its affiliated debtors have asked the U.S. Bankruptcy Court in the District of Delaware to exclude two of its subsidiaries in Turkey, FTX Turkey and SNG Investments, from the ongoing bankruptcy case.

What Happened: This motion was filed as FTX, aka FTX Trading Ltd., and its debtors do not believe Turkish authorities will comply with U.S. court orders.

According to a court filing, "The orders entered by this Court do not have a 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 Turkey was 80% owned by FTX and 20% by a local director, while SNG Investments was fully owned by Alameda Research and operates as a market maker in the country.

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Furthermore, FTX claimed private citizens in Turkey affected by its bankruptcy were already filing personal claims, which made FTX Turkey subject to Turkish courts.

The court filing stated, "Any assets of FTX Turkey located in Turkey may be subject to those private claims and proceedings and may be converted by local authorities to satisfy any judgments that are entered against FTX Turkey by Turkish courts."

Why It Matters: In November, the Turkish Treasury and Finance Ministry launched an investigation into the founder and former CEO of FTX, Sam Bankman-Fried, over potential fraudulent activities.

This investigation led to the seizure of assets belonging to Bankman-Fried and affiliates by Turkish authorities, with rumors that suggested the seizure was a move by the Turkish government to compensate its citizens affected by the collapse of the crypto exchange.

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Photo: Sergei Elagin via Shutterstock