FTX Digital Moves Forward with Debtor Settment Post Sam Bankman-Fried Fallout

As we await the sentencing of former FTX CEO Sam Bankman-Fried, FTX Digital Markets Limited has recently sealed a comprehensive global settlement with its debtors and liquidators. This agreement is a crucial step forward in dealing with financial challenges during Chapter 11 proceedings.

Let’s break down the details of this significant development and the next steps in FTX Digital’s restructuring journey.

First Meeting and Liquidation Plans

FTX Digital Markets Limited has successfully reached a pivotal agreement with FTX Trading Ltd. and its associated debtors. This marks a crucial milestone in the ongoing efforts to reshape the financial landscape of FTX Digital.

Following this breakthrough agreement, FTX Digital has scheduled the first meeting of its creditors for March 15, 2024, at The Baha Mar Convention Center in Nassau, Bahamas. The primary goal is to establish a liquidation committee and inform creditors about the claims process, ensuring an organized approach to closing FTX Digital.

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Regulatory Challenges and Restructuring

Operating primarily in The Bahamas, FTX Digital facilitates the exchange of digital assets and traditional fiat currencies. However, regulatory challenges led to a winding-up petition by the Securities Commission of the Bahamas in November 2022, resulting in the suspension of its digital asset business license.

In response, provisional liquidators, including Mr. Brian Simms KC of Lennox Paton, Kevin Cambridge of PwC Bahamas, and Peter Greaves of PwC Hong Kong, were appointed by the Commercial Division of The Supreme Court of the Bahamas. Their task is to oversee the liquidation proceedings.

Subsequently, on November 10, 2023, the Court elevated them from Provisional Liquidators to Joint Official Liquidators (JOLs) with the mandate to wind up the company following applicable laws.

A Look Into the Chapter 15 Petition

Simultaneously, a Chapter 15 petition was filed in the United States Bankruptcy Court for the District of Delaware, seeking acknowledgement of the provisional liquidation as a foreign main proceeding. This recognition was granted in February 2023. It’s important to note that FTX Digital is distinct from the Chapter 11 Bankruptcy Proceedings initiated by certain other FTX entities.

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Amidst these legal intricacies, a dedicated website now serves as a hub for FTX Digital stakeholders, including customers and employees. It provides real-time updates and pertinent details related to the Bahamian Liquidation Proceedings, focusing exclusively on FTX Digital’s affairs and not delving into Chapter 11 Bankruptcy Proceedings.