The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FTX’s founder and two of his closest associates were last night accused of “misappropriating” some $4.86m of client monies to acquire high-end Bahamian real estate that they subsequently put in their personal names.

John Ray, the FTX US chief who controls 134 entities in Chapter 11 bankruptcy protection, charged that Sam Bankman-Fried together with Gary Wang, the collapsed crypto exchange’s chief technology officer, and Nishad Singh, its engineering head, had participated in “fraudulent transfers” relating to Bahamian condominiums each had purchased.

“Bankman-Fried, Wang and Singh also used debtor assets to purchase luxury condominiums for themselves on top of the other luxury real estate purchased by the FTX group for defendants and their friends and families,” Mr Ray charged in his latest lawsuit, filed in the Delaware Bankruptcy Court.

“In April 2021, Bankman-Fried, Wang and Singh each entered into agreements to purchase condominium units at an oceanfront complex in The Bahamas. The website for the complex states that it offers ‘ultra-luxe’ living next to a ‘spectacular private beach’, ‘large and exclusive’ residences that are ‘meticulously appointed’ and have ‘breathtaking views’, and amenities that include an infinity pool, gym and concierge service.

“Bankman-Fried, Wang and Singh paid for these condominiums using funds fraudulently transferred from the FTX group. Between April and June 2021, Bankman-Fried, Wang and Singh caused FTX to wire the following amounts to Abaco Law Ltd, a firm acting as intermediary between Bankman-Fried, Wang and Singh and the various property owners.”

Some $2.174m was provided “for the purchase of a unit in Bankman-Fried’s name”, while $1.655m and $1.034m were spent on units for Wang and Singh, respectively. “Although FTX had supplied more than $4.8m to purchase the condominium units, Bankman-Fried, Wang and Singh had the deeds conveyed to themselves rather than to the FTX group entity that paid for the condominiums,” Mr Ray charged.

The “oceanfront complex” was not identified in the lawsuit. However, based on a June 26, 2023, report to the Delaware Bankruptcy Court, in which Mr Ray listed the $243m worth of Bahamian real estate acquired by FTX, the legal action appears to refer to One Cable Beach. The June 26 document shows three condos were purchased in this complex for similar prices, and in corresponding timeframes, as those listed in last night’s legal filing.

Research by Tribune Business found a Securities Commission listing of registered financial and corporate services providers that identified a company called Abaco Law Ltd as having its offices at 28 Bougainvillea Avenue in Nassau. Its senior executive was named as Julian Bostwick, but there is no suggestion that he or the company have done anything wrong in relation to FTX and they are not named as defendants in the lawsuit.

“As has been widely reported, defendants caused the FTX group to spend more than $243m on real estate in The Bahamas, including multi-million dollar luxury properties for defendants and their friends and families,” Mr Ray added. “Defendants funded these real estate purchases from accounts that held commingled customer and corporate funds.

“Using these commingled funds, defendants caused the FTX Group to purchase more than 30 properties, including a $30m, six-bedroom penthouse in the Albany resort community in The Bahamas in January 2022. The property, known as the Orchid Penthouse, was home to Bankman-Fried, Wang, Singh and Ellison prior to the FTX group’s collapse.

“This quarter of a billion in real estate was not necessary for the operations of the FTX group, and conferring such largesse on defendants and their friends and families was done to the detriment of FTX group.” FTX’s Bahamian real estate purchases thus continue to attract considerable considerable controversy.

For FTX’s Bahamian liquidators last week accused Mr Ray, aided by its local law firm, of going behind their backs in attempting to sell the very same assets. Brian Simms KC, the Lennox Paton senior partner, and PricewaterhouseCoopers (PwC) accounting duo, Kevin Cambridge and Peter Greaves, alleged that the US chief and his team confessed to instructing their financial advisers to sell the high-end Bahamian real estate “for cash” without first informing them.

And the Supreme Court-appointed trio also asserted that Mr Ray’s advisers were aided in this effort by the FTX US chief’s Bahamian attorneys, Peter Maynard & Company, with such activities only “causing confusion” as to who has ultimate control of valuable real estate assets - the FTX Digital Markets liquidators or the US chapter 11 proceedings before the Delaware Bankruptcy Court.

The Bahamian liquidators alleged, in legal papers filed with the Delaware court last week, that the actions of Mr Ray’s agents represented a violation of the January 6, 2023, co-operation agreement that had been hammered out with the FTX US chief during last year’s Christmas holiday. This stipulated that the local trio would take the lead in selling-off Bahamian real estate to recover valuable assets on behalf of FTX creditors, with both sides agreeing on the process to be used.

However, Mr Simms and his colleagues are alleging that Mr Ray, who controls the 134 FTX entities in Chapter 11 bankruptcy protection in Delaware, reneged on this agreement by “threatening” that the bid to liquidate the Bahamian real estate would violate the worldwide asset freeze automatically imposed by the US court proceedings.

The Bahamian trio, in their counterclaim to Mr Ray’s late March 2023 lawsuit that seeks to deny them access to any assets caught in the crypto exchange’s multi-billion dollar collapse, then complained that their efforts to find an alternative solution for FTX’s local property assets proved fruitless prior to being informed of Mr Ray’s alleged attempt to seize control.