In a significant blow to the liquidators in the Bahamas, US Bankruptcy Judge John Dorsey has pledged to retain control over the disputed assets of bankrupt cryptocurrency firm FTX. This decision comes as a setback for the Bahamian liquidators who seek to claim a portion of the $7.3 billion in assets as part of a separate insolvency case. The outcome of this dispute hinges on the core issue of determining who has a legitimate claim to substantial sums of cash and cryptocurrency. Judge Dorsey’s assertion of sole access to these assets marks a clear stance against deferring to foreign courts, potentially impacting the future trajectory of the case.
US Judge Stands Firm in Bankruptcy Case
US Bankruptcy Judge John Dorsey has aligned with the restructuring advisers who assumed control of FTX after the co-founder, Sam Bankman-Fried, faced federal fraud charges. The pivotal question in the US bankruptcy case revolves around the ownership of $7.3 billion in cash and crypto coins. Judge Dorsey emphasized that he would not relinquish control of this crucial matter to a foreign court, firmly asserting his exclusive access to the assets.
This declaration effectively consolidates his position as the primary decision-maker in the proceedings. Judge Dorsey’s firm stance reinforces his role as the primary decision-maker in the bankruptcy case, solidifying his exclusive control over the $7.3 billion in disputed assets, which includes cash and cryptocurrency.
Battle Over Jurisdiction Intensifies
A liquidator in the Bahamas has sought permission from Judge Dorsey to bring certain legal matters before a Bahamian judge overseeing the insolvency case of FTX Digital Markets, a subsidiary of the larger FTX empire. The liquidators argued that FTX Digital Markets possesses ownership rights over FTX.com’s property. However, advisers representing FTX contend that this move is a thinly veiled attempt to seize assets in the United States and transfer the reorganization process away from the federal court in Wilmington, Delaware. The outcome of this jurisdictional dispute could significantly impact the distribution of FTX’s assets.
Final Ruling Looms
Judge Dorsey has indicated that he will deliver his final ruling on the liquidator’s request on June 9th, when the company reconvenes in court. The decision will have far-reaching implications for the future of FTX’s insolvency case. If Judge Dorsey grants the liquidator’s plea to involve a Bahamian judge, it could potentially shift control of the assets and the subsequent reorganization proceedings away from the US jurisdiction. On the other hand, if he denies the request, the liquidators may face a significant setback in their pursuit of the disputed funds.
Conclusion
US Bankruptcy Judge John Dorsey’s vow to retain control over FTX’s contested assets represents a significant setback for the liquidators in the Bahamas who are seeking a share of the $7.3 billion as part of a separate insolvency case. With the core issue of asset ownership at stake, Judge Dorsey’s refusal to defer to a foreign court showcases his determination to preside over the proceedings. As the company reconvenes in court on June 9th, all eyes will be on the judge’s final ruling, which has the potential to reshape the trajectory of FTX’s bankruptcy case and influence the distribution of its valuable assets.
