The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FTX’s US chief yesterday dismissed the $9.15bn claim submitted by his Bahamian counterparts as “invalid” and “redundant” while revealing that the crypto exchange’s local real estate holdings have been valued at up to $214m.

John Ray, who heads the 134 FTX entities in Chapter 11 bankruptcy protection in Delaware, seemingly included the sum demanded by the Bahamian provisional liquidators among the $15bn worth of claims whose validity he is disputing and contesting.

The amount sought by Brian Simms KC, the Lennox Paton attorney and senior partner, and the PricewaterhouseCoopers (PwC) accounting duo of Kevin Cambridge and Peter Greaves, was the second-largest claim submitted to Mr Ray’s team behind the Internal Revenue Service’s (IRS) $43.5bn demand.

The latter is “assumed to be subordinated”, according to Mr Ray, with the Bahamian provisional liquidation trio’s $9.15bn amounting to 14 percent of total claims submitted, according to a presentation the FTX US chief gave to creditors and clients of the former crypto exchange.

Tribune Business late last month revealed the extent of the Bahamian provisional liquidators’ claim against the FTX entities currently in Chapter 11 bankruptcy protection. Besides seeking to “clawback” more than $7.7bn in transfers made from FTX Digital Markets, the crypto exchange’s local subsidiary, the trio are also asserting a further $1.4bn is due to the Bahamian liquidation estate.

They are demanding $1.117bn in “indemnification” based on the articles of incorporation for FTX Trading, the Chapter 11 parent, which purportedly require it to compensate “agents” such as the Bahamian subsidiary for any loss and damages.

Recovery of the $256m-plus that financed FTX’s high-end residential real estate and office purchases is also included in the $9.15bn total, along with $47.628m worth of “inter-company” claims against other FTX entities and $16.226m to cover “corporate expenses”. Most of FTX Digital Markets’ “inter-company” claim, some $45.948m, is against Alameda Research, the private trading vehicle of embattled FTX founder Sam Bankman-Fried, which played a central role in the collapse.

Mr Ray, in previously responding to the Bahamian provisional liquidators’ recovery bid, asserted that the claims are “far-fetched” and based on a “fiction” because the international exchange platform, together with its millions of customers and billions in assets, was never transferred to FTX Digital Markets, and this nation’s jurisdiction, before the crypto exchange imploded in early November 2022.

The Bahamian provisional liquidation trio holds the exact opposite position, and this is at the centre of their jurisdictional battle for control of FTX’s fate - which customers and assets belong to which estate, FTX Digital Markets and The Bahamas, or Mr Ray’s Chapter 11 entities. Once that is worked out, both will then have to determine which assets belonged to the crypto exchange, and which are client assets, so that the process of returning funds to the latter can begin.

Mr Ray, meanwhile, yesterday informed creditors and clients that FTX acquired some 38 Bahamian properties, which presently have a $222m “book value” and have been valued or appraised at a collective $199m. “FTX Bahamas properties [were] appraised by the FTX Digital Markets joint provisional liquidators, via PwC, at a range of $185m to $214m,” the FTX US chief reported.

These include 15 properties, valued at a combined $151m according to book worth, in the high-end Albany development in south-west New Providence. A further six properties, estimated to be worth a combined $25m, are based at western New Providence’s Veridian Corporate Centre, while seven units at Goldwynn and five at One Cable Beach were appraised at a total $7m and $5m, respectively. Another five properties, worth $34m, are also on FTX’s books.

Mr Ray also revealed that negotiations between his team and the Bahamian provisional liquidators will take place this Friday as both sides bid to end their long-running conflict and work out how they can best co-operate in the interests of clients and creditors. The talks, though, will take place without appointed arbitrator, retired judge Judith Fitzgerald, being present. She will be briefed on the outcome this coming Monday.

Both sides are then due to exchange proposals on September 22 and 29, respectively, with “in-person mediation” before justice Fitzgerald taking place from October 2-3 in New York if required.