The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The head of FTX’s Bahamian subsidiary is handing over his Albany home to local liquidators to ensure the recovery of “more than $200m” from selling-off the crypto exchange’s real estate is not endangered.

Documents filed with the Delaware Bankruptcy Court reveal that Ryan Salame, former FTX Digital Markets chief executive, has struck a deal with US federal prosecutors, the crypto exchange’s US chief and Bahamian liquidators that will see the latter take responsibility for selling a condominium recently valued at $5.9m.

Mr Salame, as part of the plea agreement struck with the US attorney’s office for southern New York, must pay FTX’s Chapter 11 bankruptcy estate some $5.593m in restitution. The easiest way to realise this sum is to sell the Albany condo, but this created “the risk” that the former FTX Digital Markets chief might agree to a so-called ‘fire sale’ to quickly raise the cash.

This, in turn, would threaten to undermine the purchase prices obtained when the Bahamian liquidators, and the real estate agents acting for them, place FTX’s 35-strong local property portfolio on the market in the upcoming weeks. To avoid such a scenario, which would threaten recoveries for FTX clients and investors, all sides have hammered out a deal that will see Mr Salame relinquish the condo’s ownership.

Legal filings by John Ray, who heads the 134 FTX entities currently in Chapter 11 bankruptcy protection in Delaware, confirmed that the ex-FTX Digital Markets struck a plea agreement with US prosecutors on September 7, 2023, over charges he conspired “to make unlawful political contributions and defraud the US Federal Election Commission” and also conspired to operate an unlicensed money transmission firm.

This requires Mr Salame to pay $5.593m in restitution to the Chapter 11 estate headed by Mr Ray. “Following constructive, arm’s length negotiations, Salame and the debtors have agreed that in lieu of Salame paying the restitution amount to the debtors in cash, Salame will satisfy the restitution amount by transferring a residence he owns in The Bahamas, Unit No. 3A in the Marina Residences at Albany Building 10 Condominium, to FTX Digital Markets, acting by the joint official liquidators, as nominee for the debtors,” the Delaware court filings affirm.

The documents added that the condo’s $5.9m appraised value exceeds the restitution sum. The Bahamian liquidation trio are Brian Simms KC, the Lennox Paton senior partner, and PricewaterhouseCoopers (PwC) accounting duo, Kevin Cambridge and Peter Greaves.

“Satisfaction of the restitution amount by Salame transferring legal title to the residence to FTX Digital Markets, acting by the joint official liquidators as nominee for the debtors, is in the best interests of the debtors and their estates because it avoids the risk that Salame would have to sell the residence quickly at a below market price in order to raise the cash necessary to satisfy the restitution amount,” Mr Ray said.

This, he added, “would prejudice the debtors both by failing to maximise the value of the residence and creating an unfavourable market comparable for the more than $200m in other Bahamian residences that the debtors and the joint official liquidators intend to sell.

“The stipulation will enable the [Bahamian] joint official liquidators and the debtors to determine, in their judgment, the timing and sequencing for marketing the Bahamian properties to maximise their value for the estates.”

Tribune Business understands that FTX’s liquidators are set to imminently decide which Bahamian realtors will be selected to list, promote and sell the 35 local properties acquired by the collapsed crypto exchange for a combined $222m.

That decision could come as early as this week, and it is thought the liquidators are more focused on maximising the purchase price for each rather than a quick sale. Because recent estimates suggest FTX creditors will recover most of, if not all, their investment, and the Bahamian liquidators’ efforts are now fully financed via Mr Ray’s loan, there is no pressure to sell quickly at a fire sale price.

Meanwhile, Mr Ray’s legal filings revealed that Mr Salame signed an agreement to purchase the Albany condo, together with all its furniture, chattels and effects, for $7.235m on September 21, 2021, just weeks after FTX was approved to operate in The Bahamas.

Some $723,500 to cover the deal’s 10 percent deposit was wired from Alameda Research, the private trading arm of jailed FTX founder, Sam Bankman-Fried, to someone described as “Salame’s real estate attorney” on day earlier.

Then, on November 2, 2021, some $8.164m was wired from FTX Digital Markets’ account with Fidelity Bank (Bahamas) to the same attorney to pay the balance of the purchase price “along with VAT, commissions, fees and additional expenses in connection with closing”.

“The residence was conveyed to Salame by an indenture and deed of conveyance which is recorded in the Registry of Records in the Commonwealth of The Bahamas,” the Delaware Bankruptcy Court filings added. “On March 25, 2022, Salame and Alameda entered into a promissory note, dated as of December 31, 2021, whereby Salame agreed to pay $8.164m to Alameda.”

Fast forward to the present, and the Albany condo was valued at $5.9m by Bahamian appraiser, Robin Brownrigg, in a report dated January 22, 2024. This sum more than covers the restitution amount, and the $306,822 difference will be applied to what Mr Salame owes on the promissory note.

“The terms require Salame to undertake all steps to cause legal title to the residence to be transferred to FTX Digital Markets, acting by the joint official liquidators, as nominee for the debtors, and Salame, FTX Digital Markets and the debtors to execute promptly any documents which may be reasonably required to convey clear title of the residence,” the legal filings add.

Most of FTX’s residential holdings are located in Albany, plus the GoldWynn development at Goodman’s Bay and One Cable Beach. The commercial properties include the site earmarked for FTX’s Bahamian headquarters at Bayside Executive Park on West Bay Street, plus Pineapple House and multiple units at the Veridian Corporate Centre.