The work of the Joint Provisional Liquidators (JPLs) in The Bahamas has been hampered by the JPLs' lack of access to FTX Digital's own books and records

The Joint Provisional Liquidators (JPLs) in The Bahamas are seeking to re-establish access to FTX Digital’s books and records

FTX Digital Markets Ltd. (in Provisional Liquidation)
Building 27, Veridian Corporate Center
Western Road
Nassau, N.P., The Bahamas
 
 

November 30, 2022

Contacts: Mike Davies, PwC Global Corporate Affairs and Communications Team
Telephone: +44 7603 974136
Email: mike.davies@pwe.com

 

Update by the Joint Provisional Liquidators of FTX Digital Markets Limited ("FTX Digital")

 

FTX Digital was placed into provisional liquidation by the Supreme Court of The Commonwealth of the ‘Bahamas (the "Supreme Court’) on 10 November 2022 (the “Provisional Liquidation Order’).  The ‘Supreme Court appointed Brian Simms KC, of Lennox Paton, Kevin Cambridge, of PwC Bahamas, and Peter Greaves, of PwC Hong Kong, as the Joint Provisional Liquidators (collectively the "JPLs’).

‘Since their appointment by the Supreme Court, the JPLs have been reviewing the financial position of FTX Digital, investigating the causes of the collapse of FTX globally and its impact on FTX Digital, ‘seeking to identify and secure assets, and investigating all paths available to the company with a view to realising the maximum possible value for FTX Digital stakeholders.  This work is ongoing, 

‘As previously disclosed, the work of the JPLs has been hampered by the JPLs' lack of access to FTX Digital's own books and records, particularly customer information, stored on cloud-based servers.  The JPLs are seeking to re-establish access to FTX Digita’s books and records.  This includes an application to seek recognition of the provisional liquidation of FTX Digital in the United States under Chapter 15 of the US Bankruptcy Code.  Additionally, the JPLs intend to enter discussions with the debtors in possession under the Chapter 11 proceedings in the U.S. in order to seek to agree a protocol whereby ‘amongst other matters, information may be shared.

‘The JPLs have been in communication with the Securities Commission of the Bahamas (the Commission”) and are cooperating fully with the Commission's investigations.  The JPLs also ‘acknowledge and appreciate the steps taken by the Commission to safeguard the digital assets managed by FTX Digital.

There remains significant uncertainty around the outcome of proceedings involving FTX Digital.  As of the date hereof, the JPLs confirm that they have not made any redundancies and that employees who remained in the employment of FTX Digital as at the date of Provisional Liquidation Order and had not resigned or indicated their intention to resign, will continue to be retained by FTX Digital until further notice.  The JPLs are focused on addressing FTX Digital employee issues and concerns, and would like to thank the employees for their ongoing understanding and cooperation.  Any employee who wishes to contact the JPLs’ team may do so by emailing bs_employees_ftx_fdm@pwc.com.  Please note that any discussions by the JPLs with employees of FTX Digital will relate to his/her role at FTX Digital, and not with respect to his/her employment, if applicable, by any other FTX entity.

The JPLs continue to work hard to carry out their duties including seeking to gain full access to FTX Digital's information.  The JPLs will communicate further updates as and when appropriate.

FTX Digital Markets Ltd (“FDM”) - Under The Control of a Court-appointed Fiduciary in The Bahamas

The Securities Commission of The Bahamas will continue to investigate the facts and circumstances regarding FTX’s liquidity crisis and any potential violations of Bahamian law and hold any responsible companies and individuals accountable, in cooperation with other regulatory agencies and law enforcement both in The Bahamas and in other affected countries in connection with their own investigations

Securities Commission of The Bahamas 

Poinciana House
North Building, 2" Floor
31A East Bay Street
P.O. Box N-8347
Nassau, The Bahamas

Securities Commission Statement on Transfer Motion In FTX Digital Markets Chapter 15 Proceedings

Nassau, The Bahamas, Wednesday 23 November 2022 - The Securities Commission of The Bahamas (“the Commission”) issues the following statement with respect to certain remarks made by FTX Trading Ltd. and certain of its affiliates, in connection with their motion to transfer the venue (the “Transfer Motion”) of the Chapter 15 proceedings of FTX Digital Markets Ltd. (“FDM”) that were commenced to assist the provisional liquidators appointed by the Supreme Court of The Bahamas in the discharge of their duties with respect to FDM.

FDM was incorporated in the Commonwealth of The Bahamas on 22 July 2021; it was duly registered as a digital asset business under The Bahamas’ Digital Assets and Registered Exchanges Act, 2020 (the “DARE Act”).

Pursuant to Bahamas law, on 10 November 2022, the Commission determined that the customers and creditors of FDM were in need of the protection of the DARE Act, and suspended FDM’s license to conduct business and subsequently filed a petition before the Bahamian Supreme Court to place FDM into provisional liquidation. This action — the first commenced globally against an FTX entity — placed FDM under the control of a court-appointed fiduciary and removed prior management from exercising any authority over FDM.

Given the nature of digital assets, and the risks associated with hacking and compromise, the Commission determined that placing FDM into liquidation was not sufficient to protect the customers and creditors of FDM.  Accordingly, on 12 November 2022, the Commission sought an additional Order from the Supreme Court of The Bahamas for authority under the DARE Act to transfer all digital assets of FTX into digital wallets under the exclusive control of the Commission for the benefit of clients and creditors of FDM.

It is unfortunate that in Chapter 11 filings, the new CEO of FTX Trading Ltd. misrepresented this timely action through the intemperate and inaccurate allegations lodged in the Transfer Motion.  It is also concerning that the Chapter 11 debtors chose to rely on the statements of individuals they have (in other filings) characterized as unreliable sources of information and potentially “seriously compromised.”

Further, the statements made by the purported officers of FTX Trading Ltd. and the other purported Chapter 11 debtors — that they have suffered significant thefts, that their systems were compromised, and that they continue to face new hacking attempts — reinforces the wisdom of the Commission’s prompt action to secure these digital assets.

The Commission will continue to evaluate the situation, continue to act in accordance with directions issued by the Supreme Court of The Bahamas, collaborate with other supervisory authorities and take such further actions as needed to preserve the assets of FDM and to safeguard the interests of customers and creditors of FDM.

In addition, the Commission will continue to investigate the facts and circumstances regarding FTX’s liquidity crisis and any potential violations of Bahamian law and hold any responsible companies and individuals accountable, in cooperation with other regulatory agencies and law enforcement both in The Bahamas and in other affected countries in connection with their own investigations.  The Commission also looks forward to continuing to cooperate with the authorities in other jurisdictions to ensure the cooperative and vigorous resolution of all necessary proceedings to effectuate those ends.

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