The Bahamas division of crypto exchange FTX Digital Markets Ltd, FTX Bahamas, has filed for Chapter 15 bankruptcy in the United States in order to protect itself from creditors. In fact, a foreign debtor can apply for bankruptcy in the United States court system through Chapter 15 bankruptcy.
As reported by Bloomberg, the filing will give provisional liquidators, who can act as foreign representatives, access to “broad discovery concerning the property and affairs of a debtor.”
The petition was also asked to be approved by the New York bankruptcy court, stating that: “recognizing the Bahamian Liquidation will assist the orderly administration of FTX Digital’s liquidation, consistent with the public policy of the United States that the Bankruptcy Code embodies.”
Major regulators probing FTX
The decision was made after former CEO Sam Bankman-Fried filed for Chapter 11 bankruptcy protection less than a week ago. After that SBF was subsequently interviewed by Bahamian law enforcement and government officials. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in the United States are looking into FTX and its relationship with its sister companies, Alameda Research and FTX US, to determine the extent to which the company mishandled customer funds.
In the meantime, Several organizations have publicly broken ties with the failed company in the wake of its disastrous collapse. Miami-Dade County has said that they will end the business partnership with the exchange and will no longer engage in any FTX-related marketing activities in the Miami Heat complex. Major payment processor Visa also cut ties with FTX, ending the company’s debit card business.
As a result of the controversy, some members of Congress from both parties in the United States have pledged to stop accepting donations from the exchange’s top executives. Senator Elizabeth Warren expressed her thoughts on the crypto industry after the FTX demise, saying that it appears to be smoke and mirrors.
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