Local regulators fighting crypto firm’s US leadership for properties

Durrant Pate/Contributor

The government of The Bahamas is claiming control of properties worth US$256 million, bought there by the collapsed crypto currency company, FTX.

The 35 properties in question are spread across New Providence in The Bahamas. Bahamian regulators have petitioned a Delaware federal judge in the United States claiming control over FTX-owned properties in the Caribbean territory.

The regulators are trying to claw back the property from FTX’s US bankruptcy protection proceedings, arguing that allowing the properties to be administered in US. courts would be both administratively ineffective and illegal under Bahamas law. Bahamian lawyers say FTX executives, Sam Bankman-Fried and Ryan Salame spent US$256.3 million to buy and maintain the 35 different properties across New Providence.

Details of the petition

In a Monday night filing, the Bahamian lawyers asked a US judge to dismiss the Chapter 11 proceedings for FTX’s property subsidiary. The Bahamian attorneys told the court that, because all of the property is in The Bahamas, and because “Bahamian law does not allow recognition of a foreign insolvency proceeding for a Bahamian company,” the US bankruptcy proceedings should be suspended.

They argued that Bahamas regulators should be allowed to assume full control of the Bahamian real estate process. This move is likely to spark a pushback from FTX’s US attorneys and CEO, John J. Ray III, who has committed to maximising recovery for FTX clients both in the US and abroad through restructuring and asset sales.

American and Bahamian lawyers have been tussling in court over jurisdiction, with each side crying foul at the other. FTX filed for bankruptcy protection on November 11, after reporting by CoinDesk revealed significant irregularities in sister hedge fund, Alameda Research’s balance sheets.

An 11th-hour rescue by Binance ultimately failed, precipitating a run on the company and an astonishing liquidity crisis for an exchange that had once been heralded as the saving grace of crypto. Bankman-Fried, FTX’s founder, is now in Bahamian jail, after charges were filed against him by US prosecutors.

FTX’s mammoth real estate spending

This legal wrangling will give a first true look behind the curtain at FTX’s mammoth real estate spending. Tens of millions were spent just at the small island development that Bankman-Fried called home with FTX’s holding company buying at least 15 properties and one vacant lot for a combined total of over US$143 million.

Two of the largest apartments at that private Albany development came in at an eye-watering US$30 million; another was purchased for just over US$21.3 million. Bankman-Fried and Salame also invested tens of millions of dollars into land for their current headquarters building, sinking over US$25 million into purchases at the Veridian Corporate Center. 

In April, FTX broke ground on a new headquarters, which has been on hold since the exchange filed for bankruptcy in November.