Bahamas Regulator Holds FTX Assets Pending Delivery to Customers, Creditors
Deborah Kovsky-Apap, a partner in Troutman Pepper's Financial Restructuring + Insolvency Practice Group, is quoted in the December 30, 2022 Reuters article, " Bahamas Regulator Holds FTX Assets Pending Delivery to Customers, Creditors."
The sheer size of the asset seizure sends mixed signals to FTX customers, according to Deborah Kovsky-Apap, a bankruptcy attorney who is not involved in the case. The Bahamian government's action preserves assets that could otherwise be lost or stolen, but it could also deepen a dispute between the company's U.S.-based bankruptcy proceedings and the Bahamas liquidation.
Ideally, both sides would cooperate to sort out which creditors should be repaid with the seized assets, a task that is already more difficult than normal due to FTX's extensive commingling of customers' funds with those of FTX and its sister hedge fund Alameda Research, Kovsky-Apap said.
"It may be impossible to unscramble that egg," Kovsky-Apap said. "And if you can't, the fact that a government entity has seized these assets and staked out a claim to them creates significant additional tension."