The tiny Bahamas looms large in the future of FTX
A turf war between the United States and Bahamas could make it harder for a parade of international creditors to claw back the billions owed to them following the collapse of the crypto exchange FTX. The tiny island nation, where FTX is headquartered, believes it has the upper hand over how the firm will be wound down after the Securities Commission of the Bahamas took control of much of its digital assets and questioned the legitimacy of bankruptcy proceedings in the U.S.
The jurisdictional tug of war emerged after John Jay Ray III, FTX’s new C.E.O. who is pushing for the company to be wound down in U.S. Bankruptcy Court in Delaware, slammed the company’s management (which happened to raise $1.9 billion from the giants of Silicon Valley and Wall Street). Mr. Ray, whose résumé includes overseeing the $23 billion Enron bankruptcy, said he had never seen “such a complete failure of corporate control.” The lowlights: Expenses approved by emoji and billions of dollars in losses, but no paper trail. Where were the auditors? The blame game has already begun.
In Thursday’s bankruptcy filing, Mr. Ray grumbled that Bahmanian authorities had gained “unauthorized access” to FTX assets, in an effort “to undermine” the Chapter 11 proceedings. He also suggested that Sam Bankman-Fried, the firm’s founder, who is known as S.B.F., helped them.
S.B.F. was (unusually) quiet on Thursday. The 30-year-old, who is under investigation by the Justice Department and S.E.C. for, among other things, lending customer money to his trading unit, Alameda Research, stayed off Twitter. The silence followed a series of tweets and a bizarrely candid interview with Vox this week, in which S.B.F. took a shot at regulators for “making everything worse,” and admitted to “messy accounting.” One big development: S.B.F. has a new legal team, Semafor reports, that includes David Wills, who teaches at Stanford Law School — Mr. Bankman-Fried’s parents are also Stanford professors.
The list of FTX’s 50 biggest creditors is scheduled to come out on Friday. Meanwhile, contagion fears are growing.Following a run on customer deposits, FTX closed last week and S.B.F. resigned, triggering a broad sell-off in digital assets in recent days. The volatility has struck the likes of Genesis, a cryptocurrency lender, which, according to The Wall Street Journal, sought a $1 billion emergency loan before suspending withdrawals. And Multicoin, a crypto venture fund that has funds tied up in FTX, warned investors that “many trading firms will be wiped out and shut down” following the collapse of FTX and Alameda.
Swifties versus Ticketmaster
Today was supposed to be when the general public could start buying tickets for Taylor Swift’s first tour in five years. But Ticketmaster called off the sale on Thursday, citing “extraordinarily high demands on ticketing systems and insufficient remaining ticket inventory to meet that demand.”