It resembles the demise of the once prominent crypto exchange, FTX will continue to make headlines. The crypto industry witnessed the collapse of a series of projects this year. Bankruptcy applications were the theme of this bear market. While this trend continues, a disclosure was made by the company’s Bahamian liquidators.
According to court registrations, it was revealed that FTX contained signs of “serious fraud and mismanagement”. These filings were filed by Bahamian liquidators. According to the document filed with the Bankruptcy Court for the Southern District of the United States of New York, “The Joint Provisional Liquidators’ findings to date suggest that there may be serious fraud and mismanagement” involving the group.
It should be noted that the people responsible for closing the company’s business in the Bahamas, Brian Simms, Kevin Cambridge and Peter Greaves filed the paperwork on behalf of the liquidators. These were the Bahamas based attorneys appointed by the Supreme Court of the Bahamas.
On Nov. 11, FTX filed for bankruptcy in Delaware, but Simms has challenged that claim, claiming in a legal statement Tuesday that the entire group was actually run from the Bahamas. Therefore, he disputed that FTX was not authorized to file for bankruptcy in the US.
With allegations of fraud and mismanagement, there is speculation that the court will temporarily ban the sale of FTX assets. Or until the court rules on the bankruptcy petition.
Could the Bahamas have prevented FTX from failing?
The demise of FTX has reached governments around the world. The Prime Minister of the Bahamas Philip Davis noted that the government could not have prevented the entire FTX debacle. Davis made this statement while noting that there were no “shortcomings” in his crypto regulations.
He mention,
“Based on the analysis and understanding of the FTX liquidity crisis to date, we have not identified any deficiencies in our regulatory framework that could have prevented it.”
However, the Bahamas securities regulator immediately addressed the issue due to the existing framework.