FTX bankruptcy filings highlight ‘complete failure of corporate controls’

Fresh FTX bankruptcy filings called out Sam Bankman-Fried and the rest of the failed crypto exchange’s leadership for a “complete failure of corporate controls” and cited the former CEO’s “incessant disruptive tweeting” since the exchange imploded. 

The company’s bankruptcy lawyers argue that Bankman-Fried is actively trying to disrupt the bankruptcy process for the myriad of corporate entities that fall under the FTX umbrella.

FTX’s bankruptcy lawyers have filed an emergency petition to move the Chapter 15 bankruptcy proceedings in the Bahamas, which are centered around FTX Digital Markets, to U.S. Bankruptcy Court in Delaware.

If granted, the move would help consolidate the myriad of bankruptcies into one U.S. court.

The filing lays out FTX’s current assets and describes the case as “unprecedented”

‘Incessant disruptive tweeting’

“In terms of the celebrity of Mr. Bankman-Fried, his unconventional leadership style, his incessant and disruptive tweeting since the Petition Date, and the almost complete lack of dependable corporate records, these Chapter 11 Cases are unprecedented,” wrote Adam Landis, a partner at Landis, Roth & Cobb. “Mr. Bankman-Fried, the co-founder, and controlling owner of all of the Debtors and of FTX DM, appears to be supporting efforts by the JPLs to expand the scope of the FTX DM proceeding in the Bahamas, to undermine these Chapter 11 Cases, and to move assets from the Debtors to accounts in the Bahamas under the control of the Bahamian government.”

The filing goes on to cite Twitter direct messages between Bankman-Fried and a Vox reporter, published yesterday, as evidence of his intent to do this.

Several of FTX’s other corporate entities have already filed in Delaware for the more common Chapter 11 bankruptcy. Chapter 15, which FTX Digital Markets, the Bahamian arm of the company, is a type of bankruptcy for companies that have filed for bankruptcy protection in more than one country. FTX’s lawyers argue, in contradiction to what Bankman-Fried wants to do, that those cases should be consolidated in one bankruptcy court.

(Updates will details throughout.)

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