U.S. Judge Denies Bahamian Claim on FTX's $7.3 Billion Assets in Bankruptcy Battle

U.S. Judge Denies Bahamian Claim on FTX’s $7.3 Billion Assets in Bankruptcy Battle

Updated: 10 June 2023

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A federal court rejected a request to grant control over the $7.3 billion in disputed assets owned by cryptocurrency exchange FTX. The news comes after a bankruptcy hearing on Thursday, June 8.

The ruling was a setback for Bahamian liquidators who sought to possess some assets using their nation’s legal system. Judge John Dorsey of the United States Bankruptcy Court resolutely declared:

Under no circumstances would I ever defer a core jurisdictional issue to a foreign court.

He emphasized that determining the true owner of the significant crypto and cash assets at the center of the bankrupt exchange was an important legal matter.

The ownership of FTX’s multibillion-dollar assets was a major issue of dispute throughout the hearing held in the U.S. Bankruptcy Court for the District of Delaware. FTX’s restructuring consultants opposed the proposal after taking over management of the exchange. This was after founder Sam Bankman-Fried’s detention in December on suspicion of fraud.

In the meantime, Bahamas liquidators argue that a portion of the bankruptcy case should take place in their nation’s courts. Judge Dorsey ultimately backed FTX’s legal counsel, noting, “The courts may have concurrent jurisdiction” while emphasizing the difficulty of retrieving the assets from the Bahamas.

⚠️ JUST IN: The U.S. bankruptcy judge handling FTX’s case stated that he would not rely on a Bahamian court for crucial matters, such as determining the FTX entity responsible for managing assets and reimbursing customers of the bankrupt cryptocurrency exchange – Reuters

— BecauseBitcoin.com (@BecauseBitcoin) June 8, 2023

Although Judge Dorsey’s stance on the matter is rather obvious, there is still no final decision. On June 9, the case will be taken up again as the court plans to issue a formal ruling.

The judge’s decision to deny the Bahamian claim is a major blow for the liquidators, who had hoped to obtain some of FTX’s contested assets. The U.S. court in charge of the bankruptcy proceedings has objected to their reliance on the jurisdiction of the legal system in their native country.

International Jurisdiction Clash

This development highlights the complexity and international nature of cryptocurrency-related legal battles. As evidenced by the FTX case, jurisdictional difficulties make deciding the best forum for settling asset ownership disputes extremely difficult. In the quickly changing universe of digital assets, the conflict between the Bahamian liquidators and FTX’s consultants serves as an example of how different legal systems and their interpretations of ownership rights clash.

The fate of the $7.3 billion in assets owned by FTX is still up in the air as the bankruptcy case moves forward. The Bahamian liquidators and FTX’s advisors will be closely monitoring Judge Dorsey’s upcoming decision. This is because it will have a substantial impact on each party’s position in the intricate legal dispute.

It seems likely that disagreements over asset ownership and jurisdiction will continue in the realm of cryptocurrencies, where decentralized and borderless transactions are the norm. To address these complex challenges adequately, legal frameworks and precedents will need to be formed. This must be done as as industry continues to evolve.

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