The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FTX’s Bahamian provisional liquidators have gained control of $46m in Tether stablecoins as part of their “co-operation” deal with the crypto exchange’s US chief that creates a “path forward” to resolve all remaining disputes.

The agreement, which was filed in the Delaware federal bankruptcy court over the weekend, will also see the Bahamian trio “take the lead” in selling the $256.3m worth of high-end local real estate that FTX acquired prior to its spectacular implosion in early November 2022. They will be responsible for “arm’s length” marketing of these properties to potential buyers “utilising the services or one or more brokers”.

Tribune Business understands that the liquidators - Brian Simms KC, the senior Lennox Paton partner, and PricewaterhouseCoopers (PwC) accountant duo, Kevin Cambridge and Peter Greaves - are satisfied that the agreement with John Ray and his Chapter 11 team places them in a much stronger position than previously following a near two-month battle over who will control FTX’s liquidation, restructuring and sell-off.

The deal states that the two sides have a “shared goal” of maximising asset recoveries for the benefit of FTX’s creditors and investors, as well as “avoiding redundant work, minimising expense and respecting the sovereignty of different legal systems”. Parallel legal proceedings related to FTX’s winding-up will thus continue before both the Bahamian Supreme Court and Delaware federal bankruptcy court.

The agreement effectively marks out both sides’ territory, with the Bahamian provisional liquidators responsible for the locally-domiciled subsidiary, FTX Digital Markets, and Mr Ray and his team looking after the entities in Chapter 11 bankruptcy protection in Delaware minus FTX Property Holdings, the company that holds all the local real estate purchases.

“The parties agree that FTX Digital Markets shall be primarily responsible for recovering value from the assets and property in the name of FTX Digital Markets, including without limitation all real and personal property and bank and security accounts in the name of FTX Digital Markets regardless of where located,” the two sides’ agreement stated.

FTX Digital Markets is the entity under Supreme Court-supervised liquidation in The Bahamas, and the agreement also makes the joint provisional liquidators responsible for “the approximately $45m of US Tether coins currently frozen in The Bahamas”. Tether is a stablecoin, with its value pegged one:one with the US dollar, thus making it a critical recovery source that can help finance the liquidation’s costs.

Christina Rolle, the Securities Commission’s executive director, previously revealed that these assets, which she valued at $46m, had been frozen at the regulator’s request. While initially wanting these transferred to the Securities Commission’s care, she said it as agreed that Tether could instead “maintain a freeze over” the tokens until their ownership was resolved given the existence of the Chapter 11 proceedings.

As for the Bahamian real estate investments, the “co-operation agreement” stipulates: “The parties agree that the value in the properties owned by FTX Property Holdings will be realised over time in one or more arm’s length marketing processes utilising the services of one or more mutually acceptable brokers in a manner and on a timeframe designed to maximise the recovery.”

This, the agreement said, could be effected by a Supreme Court liquidation process running concurrently with the Chapter 11 proceedings or some other “mutually acceptable arrangement”. It added: “The joint provisional liquidators.... shall take the lead in managing the properties, determining the appropriate strategy for the monetisation of the properties, identifying buyers and conducting the marketing process.” This, though, all has to be approved by Mr Ray and his team.

Mr Simms, describing FTX Property Holdings as an International Business Company (IBC), said in previous court filings that its sole purpose had been to “purchase and hold properties on the island of New Providence in The Bahamas as offices for the benefit of FTX Digital Markets and dwellings for employees of FTX Digital Markets”.

He added: “FTX Property Holdings conducted no business other than the purchase and ownership of real property. Immediately following our appointment, the joint provisional liquidators began investigating all aspects of FTX Digital Markets’ business, including its business dealings with FTX Property Holdings. As part of this investigation, we have identified 35 properties owned by FTX Property Holdings, all located on the island of New Providence in The Bahamas.”

These included no less than 16 properties at Albany, 15 of which were condominiums, valued between $4.75m and $30m. A further seven units were acquired in the GoldWynn project at Goodman’s Bay, which is scheduled to open in early 2023, valued between $563,520 and $1.449m.

Another four units, varying in value from $975,000 to $1.54m, were purchased in the One Cable Beach project developed by Jason Kinsale’s Aristo Development. Some $26.34m was spent on acquiring multiple units at the Veridian Corporate Centre developed by Sebas Bastian, with further outlays of $17.435m, $9m and $1.8m on property at Ocean Terrace, Old Fort Bay and Pineapple House respectively.

“We would like to thank all of the joint provisional liquidators of FTX Digital Markets for constructive meetings this week in Miami and all their work on behalf of their estate,” said Mr Ray in their joint Friday statement. “There are some issues where we do not yet have a meeting of the minds, but we resolved many of the outstanding matters and have a path forward to resolve the rest.”

“Our meetings stressed our shared objective to find the best solution for customers and creditors of the FTX.com platform,” said Mr Simms. “Each jurisdiction has different tools available to accomplish that objective and we look forward to working collaboratively to optimize outcomes for all of our respective stakeholders.” The co-operation agreement has to be approved by both the Bahamian Supreme Court and Delaware court.