FTX Has More Than $250M In Real Estate. The Bahamas Wants It
In the immediate aftermath of FTX founder Sam Bankman-Fried's arrest in the Bahamas, an international dispute is building over his company's real estate investments.
Managers of the bankrupt cryptocurrency exchange are locked in a tug of war with the Bahamian government over a large real estate portfolio that the cryptocurrency exchange is looking to liquidate, CNBC reports. At issue is more than $256M in property that FTX acquired and maintained across the island of New Providence.
The portfolio includes 35 properties, including more than a dozen in and around Bankman-Fried's Albany home — where he and other FTX leaders reportedly holed up amid the exchange's collapse last month — and the site of FTX's planned headquarters, which broke ground in April and has since had construction halted, per CNBC.
The fight occurs as Bankman-Fried awaits extradition from the Bahamas to the United States, following his arrest Monday. The arrest was made after the U.S. issued criminal charges against Bankman-Fried, per a release from the office of Prime Minister Philip Davis.
"The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law," Davis said in a statement. "While the United States is pursuing criminal charges against SBF individually, The Bahamas will continue its own regulatory and criminal investigations into the collapse of FTX, with the continued cooperation of its law enforcement and regulatory partners in the United States and elsewhere."
FTX has been embroiled in a growing scandal since last month when a CoinDesk report about its investment in its own crypto token spurred a run on withdrawals that left it in a liquidity crisis and careened it into bankruptcy.
John Ray III, the corporate restructuring expert assigned to manage the firm, has experience managing the bankruptcy of Enron and others, but called the collapse of the third-largest cryptocurrency exchange in the world an "unprecedented" failure of corporate controls.
The Bahamian government has sought to prevent the sale of FTX's assets, and the new details about FTX's real estate portfolio stem from documents filed by Bahamian regulators in Delaware bankruptcy court Monday.
The liquidators argued in their latest filing that a holding company controlling FTX's real property was unlawfully transferred to the U.S. as part of Chapter 11 bankruptcy proceedings.
But FTX's new leadership, led by Ray, has pushed back on those claims. Lawyers for Ray called the Bahamian liquidators "reckless" in a counter-filing, claiming that they had pushed Bankman-Fried to try and get his password back for corporate accounts, CoinDesk reports.
Bankman-Fried was due to testify before Congress Tuesday before his arrest. In a transcript of planned testimony published by Forbes Tuesday, the former CEO sought to draw a distinction between FTX US, which he said was still fully solvent, and FTX International, which he said absorbed a substantial portion of the hit caused by the run on FTX's exchange in early November.
He weighed in against Ray's jurisdiction over FTX International's holdings, while also claiming Ray and the Chapter 11 team held data that could help untangle information relevant to the Bahamian liquidators.
The Bahamian properties were under the control of Bankman-Fried and his former co-CEO Ryan Salame, who directed the acquisition of dozens of properties, including luxury villas bought for up to $30M and development sites bought for $25M. Salame has not been charged with a crime.
