The Bahamas subsidiary of the troubled crypto derivative exchange FTX has filed for chapter 15 bankruptcy protection in the Southern Court of New York, Bloomberg reported on Wednesday.
FTX Bahamas Files for Bankruptcy Protection
Chapter 15 bankruptcy filings are designed to tackle the insolvencies organizations and businesses face that extends to more than one country. It also allows foreigners to file for bankruptcy protection in U.S. courts.
Under the filing, the exchange will be able to protect itself from customers who wish to file lawsuits against them over their funds.
On November 11, Sam Bankman-Fried (SBF), the founder of FTX, shared a Twitter thread where he revealed that he had filed for “voluntary chapter 11 proceedings in the US.” He noted that the filing was for FTX, FTX US, and Alameda Research.
U.S. SEC Probes SBF and FTX
Last week, the United States Securities and Exchange Commission (SEC) commenced investigations into SBF to determine if he broke financial laws. The regulatory agency is also probing the FTX boss’ involvement in the exchange’s collapse.
The financial watchdog had been investigating the troubled FTX some months ago. However, with the latest developments, the probe has intensified, with the SEC investigating whether the exchange misappropriated users’ funds.
The collapse of FTX has attracted the scrutiny of other regulatory bodies such as the United States Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC).
FTX’s Comeback Plan
For about two weeks, FTX and its affiliated companies, Alameda Research and FTX US have been severely crippled financially. Since the leak of Alameda’s balance sheet, concerns over the financial status of the three companies have risen.
Amid a massive market selloff, SBF proposed a plan to raise about $8 billion worth of funds to stabilize financially. Justin Sun, the founder of Tron blockchain, hinted that he would support SBF.
The funds’ request comes only after Binance had backed out of its plan to buy the struggling FTX. The leading crypto exchange stated that it took this action due to the news surrounding FTX’s alleged mishandling of funds.
