The embattled cryptocurrency mogul Sam Bankman-Fried is undermining efforts to reorganize his crumbling empire with "incessant and disruptive tweeting" that appears aimed at moving assets away from the control of a U.S. court in favor of one in the Bahamas, U.S. lawyers for the bankrupt crypto platform FTX said in a court filing.
FTX, which is now under the control of John J. Ray III — a restructuring lawyer who oversaw the liquidation of Enron — asked a federal judge in Wilmington, Delaware, to transfer a competing bankruptcy case filed in New York by Bahamian liquidators to Delaware.
Such a move would consolidate all U.S.-based insolvency proceedings in one court. They also asked the Delaware judge to block "all persons and all governmental units" from taking action in any court around the world to seize assets or collect money from the company.
"Enormous efforts are underway to bring some semblance of order to a chaotic environment," lawyers for FTX wrote in the bankruptcy filing. "It is critical to the efforts to end the chaos and to ensure that assets can be secured and marshalled in an orderly process."
Liquidators in the Bahamas moved earlier this week to solidify control over the insolvency of FTX Digital Ltd., a subsidiary within Bankman-Fried's crypto enterprise, bankruptcy court papers show. They argue that account holders with assets in FTX's custodial wallets are likely creditors of the Bahamian unit and are seeking to probe the rest of the crypto exchange's corporate entities.
In their New York filing, the liquidators asked a federal judge to officially recognize and support their case in the Supreme Court of the Bahamas. In any other insolvency case, such a move would be considered routine. The move is unusual in this case, however, because FTX put itself and more than 100 affiliates into court protection in federal court in Delaware.
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He went on to suggest that he could still fix the matter if "we can win a jurisdictional battle vs. Delaware."
FTX's lawyers included the comments in the bankruptcy filing Thursday morning.
Bankman-Fried "appears to be supporting efforts" by the Bahamian liquidators "to expand the scope of the FTX DM proceeding in the Bahamas, to undermine these Chapter 11 cases, and to move assets from the debtors to accounts in the Bahamas under the control of the Bahamian government," the lawyers wrote.
Bankman-Fried didn't respond to messages seeking comment on the Vox article, but in his own Twitter
In the hours before Bankman-Fried quit as CEO, he talked with his personal lawyers, other senior FTX people and his father, Joseph Bankman, a professor at Standard Law school who is considered an expert on tax law.
He resigned at 4:30 a.m. on Nov. 11, Ray took over and the bankruptcy case in Wilmington, Delaware began.
