U.S. lawyers in charge of the Chapter 11 bankruptcy of the FTX cryptocurrency exchange are sparring with counterparts in the Bahamas handling another piece of the collapsed business, with both camps accusing the other of bad faith and a lack of transparency and cooperation. 

James Bromley, the FTX attorney in the U.S., in a court hearing in Delaware on Wednesday objected to sharing “dangerous information with the Bahamian liquidators.” 

He argued the Bahamian side wasn’t trustworthy as they had worked with FTX’s founder Sam Bankman-Fried, 30, to undermine the U.S. bankruptcy case and withdraw assets from the exchange in favor of a select group of creditors. 

His barb followed a request by lawyers for Bahamian-based affiliate FTX Digital Markets to the U.S. bankruptcy judge for access to FTX data, such as various Slack, Google, and Amazon Web Services accounts. 

FTX.com and more than 100 of its affiliates filed for bankruptcy in the U.S. on Nov. 11 and Bankman-Fried – a U.S. citizen and under arrest in the Bahamas – has been charged by U.S authorities with multiple counts of fraud, and billions of dollars in customer funds have gone missing. 

The U.S. wants Bankman-Fried extradited, but the bickering between the bankruptcy lawyers is raising concern that process could be affected.   

Liquidation war

FTX Digital Markets separately filed for Chapter 15 bankruptcy – used for companies with operations in more than one country – in the Bahamas three days after the main FTX group filing. Two provisional liquidators were appointed to oversee the FTX Digital Markets case by the Securities Commission of The Bahamas.

John J. Ray III, the lawyer in charge of the U.S. part of the bankruptcy and FTX’s new chief executive, criticized the Bahamas authorities during testimony to the U.S. congress on Tuesday.

He said FTX executives worked with Bahamian officials to unfreeze local accounts on the exchange after withdrawals were halted for all creditors. Bahamian users were granted access to their funds 24 hours before FTX’s bankruptcy filing and about US$100 million was withdrawn by about 15,000 accounts, according to Ray. 

“[Bahaman officials] put out statements that the move was in the interest of Bahamian creditors, although in our view, they violated the automatic stay in bankruptcy,” he added. In US  bankruptcy law, an automatic stay is an order that halts actions by creditors. 

In turn, the Securities Commission of the Bahamas accused Ray of making “misstatements” to “advance questionable agendas” related to the FTX case. 

The Securities Commission of the Bahamas did not respond to a Thursday email requesting comment on the proceedings. 


The U.S. side seems to have been angered by knowledge that Bahamian officials were privy to FTX’s misuse and loss of client funds as early as Nov. 9, according to evidence in FTX’s bankruptcy case made public on Wednesday.

A letter from the Securities Commission of The Bahamas Executive Director Christina Rolle showed that Ryan Salame, the former co-CEO of FTX Digital Markets, tipped them off that clients’ assets held by FTX had been transferred to its brokerage and hedge fund arm Alameda Research. 

“The commission understood Mr. Salame was advising that the transfer of clients’ assets in this manner was contrary to the normal corporate governance and operations of FTX Digital,” wrote Rolle, adding that the transfers “may constitute misappropriation, theft, fraud or some other crime.”

Blockchain records show FTX provided at least US$4.1 billion to try and fix a growing hole in Alameda’s balance sheet in September alone. That bailout included the illegal use of user funds from the exchange, according to a report from Reuters citing two unnamed sources. 

On Monday, Ray’s team also released Nov. 9 emails between Bankman-Fried and the Attorney General of The Bahamas in which Bankman-Fried said FTX “segregated” funds belonging to Bahamian customers and offered to open withdrawals to them exclusively. 

“Throughout the process, there were communications between Bankman-Fried and the Bahamian government, specifically related to this leakage of assets,” Ray said.

He added that either Bankman-Fried or FTX co-founder Zixiao “Gary” Wang signed off on the final withdrawals. 

Ray told congress that the two separate filings between jurisdictions were a unique and unhelpful situation.  


“Unlike in the Chapter 11 process, there’s no transparency in the Chapter 15 process with the  Bahamians. We’ve repeatedly asked them for clarity, and we’ve been shut down by them,” he said. 

“The pushback that we’ve gotten is sort of extraordinary in the context of bankruptcy… It raises questions, and obviously, we’re investigating it.” 

Ray testified that Bankman-Fried might have been attempting to undermine the scope of the U.S. bankruptcy law by filing with Bahamian authorities after moving assets to accounts under their control. 

One of the provisional liquidators appointed by the Bahamas Securities Exchange Commission, lawyer Brian Simms, said in a Nov. 14 court filing that he believed FTX was not authorized to file for bankruptcy in the U.S. without FTX Digital’s approval. 

During the congressional hearing, Representatives Alexandra Ocasio Cortez and Jake Auchincloss requested Ray to update the committee with any further findings on the relationship and communication between Bankman-Fried and any authorities in the Bahamas.

According to Eyewitness News Bahamas, Bankman-Fried filed a bail application on Dec. 15, or just two days after a previous application was rejected by a court judge, who said he was a flight risk. The latest bail application is set to be heard before the Supreme Court on Jan. 17, or in about a month, the report said, without saying who provided the information.

Separately, Eyewitness News Bahamas did provide a link to a 2018 documentary on the conditions for inmates at the Bahamas Department of Corrections where Bankman-Fried is now being held.