FTX Bahamas seeks bankruptcy

• FTX’s Bahamas unit has sought US creditor protection.
• FTX Digital Markets filed for Chapter 15 bankruptcy.
• Foreign debtors can apply for Chapter 15 bankruptcy in the U.S.

FTX’s Bahamas unit has sought US creditor protection.

FTX Digital Markets filed for Chapter 15 bankruptcy Tuesday.

Foreign debtors can apply for Chapter 15 bankruptcy in the U.S. to protect their assets.

Non-US corporations exploit the provision to protect themselves from US creditors.

FTX, the third-largest crypto exchange, filed for bankruptcy on Friday after investors rushed to withdraw $6bn and Binance’s proposed rescue agreement crumbled. Sam Bankman-Fried, CEO and founder, also resigned.

Bankman-Fried, a 30-year-old MIT graduate hailed as the next Warren Buffet, pledged to explain “what occurred” and asserted the exchange has enough assets “to compensate all consumers.”

FTX’s implosion sent shockwaves through the cryptocurrency community, leaving investors feeling misled and drawing analogies to Lehman Brothers.

Justice and SEC are investigating Bankman-Fried and his company. The investigations may focus on whether the firm illegally exploited customer deposits to support bets at Bankman-hedge Fried’s fund, Alameda Research.

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