FTX Alleges Disgraced Founder SBF Is In Cahoots With Bahamas PM, Securities Commission

Cryptocurrency exchange FTX is seeking to strip its Bahamas-based subsidiary, FTX Digital Markets (FTX DM), of any claim over the company's assets.

In a legal filing made on March 19, FTX accused the Bahamas authorities of aiding founder Sam Bankman-Fried in his attempts to evade justice.

The filing states that FTX DM was a "mere shell" that was set up to further alleged fraud by Bankman-Fried.

FTX DM was placed into liquidation by the Bahamas courts in November 2022, and the wider corporate group filed for bankruptcy in Delaware soon after, leading to disputes over who could access the company's central data.

The recent filing by FTX, now under the leadership of restructuring expert John J. Ray III, seeks to have the Delaware courts entirely strip Bahamas liquidators of their role.

It argues that FTX DM was an economic and legal "nullity" that doesn't legitimately have any fiat, crypto, or intellectual property to resolve.

The filing alleges that FTX DM was "formed and functioned as an offshore haven for a continuous fraudulent scheme." The company accuses Bankman-Fried of maintaining a close relationship with Bahamian law enforcement agencies, including the Prime Minister, Attorney General, and Securities Commission, in an attempt to minimize his criminal and civil exposure.

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The filing cites transfers of $143 million made to FTX DM bank accounts and claims that the subsidiary was a short-lived match-making service that only started in May 2022. Bankman-Fried has pleaded not guilty to charges, including wire fraud, linked to his tenure as CEO at FTX.

Other former executives have pleaded guilty to criminal charges.

The Bahamas Securities Commission and Bahamas liquidators have not yet commented on the recent filing.

FTX has previously faced criticism from the Bahamas regulator, who accused Ray of having a "cavalier attitude to the truth."

However, in January, Ray and the Bahamas liquidators reached a deal to cooperate on their parallel restructuring exercises.

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