FTX’s new leadership cooperating with law enforcement, regulators

The current corporate leadership of FTX and its associated companies are cooperating with investigators for the U.S. government and regulators, a lawyer representing the troubled firm said in an inaugural bankruptcy hearing today.

“We are also in constant communication with the U.S. Department of Justice,” including the Southern District of New York’s Cyber Crimes Unit, and “in communication constantly with the SEC and CFTC,” said Jason Bromley, a partner at Sullivan and Cromwell and co-counsel representing the company in the U.S.

New FTX CEO John Ray III and the rest of the exchange’s new leadership are coordinating with “the U.S. government and the various regulators around the world who have taken a very keen interest in this situation,” Bromley continued.

Bromley added: “We have received requests, I would say some might say demands, from the U.S. Congress, both from the Senate and the House, to have Mr. Ray appear in December.”

FTX remains under hacking threat, Bromley warned, noting a hack that took place hours after the initial bankruptcy filing, and the firm has taken measures to protect its remaining assets.

A house divided

FTX’s representatives remain unusually at odds with former CEO Sam Bankman-Fried and other former members of FTX leadership, a disagreement that appears to involve the Bahamian government.

Bankman-Fried told a Vox reporter earlier this month that he regretted filing for bankruptcy. The lawyers now representing the company asked for an emergency motion from a federal judge to place FTX Digital Markets, the Bahamas branch of FTX’s corporate empire and where much of the company’s operations took place.

Representatives for FTX Digital Markets have reached a partial agreement with the U.S. legal team over moving proceedings for consolidating that part of the bankruptcy, but Bromley told the U.S. Bankruptcy Court for the District of Delaware today that they have evidence assets were moved out of other accounts to the Bahamas, and implied that the Bahamian government has not been forthright about its actions.

“We do have evidence that there has been movement of assets out of the debtors’ estates to the Bahamas, and there have been somewhat cryptic comments that had been issued by the government of the Bahamas as to the actions they have taken in respect to certain assets,” Bromley continued. 

The Securities Commission of the Bahamas issued a statement late on Nov. 17 saying that it had directed the moving of FTX assets on Nov. 12, and did not recognize FTX Digital Markets as part of the main bankruptcy proceedings ongoing in the U.S. 

Bromley built on previous accusations of poor corporate governance — or worse — levied by FTX’s leadership and lawyers toward Bankman-Fried and other former members of the FTX leadership team, saying, “Some or all of them were also compromised individuals.”

According to the company’s current leadership, roughly 260 employees remain at the company. 

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