The FTX Files

A Primer On The Chapter 11 Case

Introductory Note

We’ve prepared The FTX Files as an introductory primer on the FTX chapter 11 case. Starting at case commencement, we analyze and provide insight into the relevant key pleadings and hearings which have set the stage of this chapter 11 case. 

For those looking to gain a foundational understanding of the FTX bankruptcy, we submit that a full reading of The FTX Files will prove extremely helpful. For those doing research into the case’s early days, The FTX Files will likewise be of assistance.

As of 4 January 2023, as the case has taken shape, we are pivoting our ongoing coverage to faster, more accessible means in order to keep up with breaking developments in the case and related matters.

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Sam Bankman-Fried (“SBF”) is the founder of, and was, up until the date of filing of its chapter 11 petitions, the CEO of FTX. He was born on 6 March 1992, making him 27 years old at the time of the formation of FTX.

SBF’s parents are Joseph Bankman and Barbara Fried, both professors of law at Stanford Law School.

SBF attended MIT, graduating with a BS in physics in 2014.

SBF started his career at Jane Street Capital before founding his own proprietary trading firm, Alameda Research, in 2017.

In 2018, SBF conceived of and executed an arbitrage between Japanese and US crypto markets which would see him net, at times, up to $25 million per day. This, to us, is where it all started: the initial pool of capital and credibility which allowed everything else to, well, metastasize.

Perhaps the best biography of SBF is one which no longer exists. VC firm Sequoia published a roughly 13,000-word piece on its website singing the praises of their most favored crypto wunderkind. At the onset of the FTX crisis, as you’d expect, Sequoia removed the piece. However, the internet never forgets, and you can read the piece in full, as it was originally published, here.

For more on SBF, we recommend having a look at his Wikipedia page, as a starting point for further research.

FTX & Events Leading Up To Bankruptcy

Editorial Note

We could spend days / weeks / months writing about the history of FTX and the events which precipitated its downfall, but there are others who are doing an incredibly admirable job of it, and what we might produce here of our own accord would nevertheless be a redundancy. So, we here refer you to the Wikipedia pages for FTX (here) and the Bankruptcy of FTX (here), as starting points should one wish to dive deep into history.

For the purposes of The FTX Files, we will focus on the developing circumstances of: a) the FTX bankruptcy case; b) the investigations into FTX, its founders, etc. and any actions (e.g., enforcement actions, prosecutions, etc.) resulting therefrom; c) the wild / ridiculous / sordid details coming to light about what was really happening at FTX (because let’s be honest, that’s what everyone’s here for, isn’t it?); and d) anything else of related interest, including consequences and broader implications for, inter alia, the crypto industry, regulatory frameworks, etc.

The FTX Bankruptcy Case – Basic Info

Bankruptcy 101

For those relatively unfamiliar with how the bankruptcy process / chapter 11 process works in the United States, we recommend doing at least a quick peruse of a primer or guide of your choosing. There are many good options, and we recommend this one, published by the Administrative Office of the United States Courts.

Case Commencement

As is commonly known by bankruptcy practitioners (and should be known by everyone), the most helpful source of information in any bankruptcy case is the website maintained by the debtor’s claims agent. It contains, inter alia, the court docket, the claims register, and instructions for the submission of claims. Please find the link for the FTX claims agent website here:

The Chapter 11 Petition

FTX filed a voluntary chapter 11 petition on 11 November 2022 before the U.S. Bankruptcy Court for the District of Delaware.

While bankruptcy petitions themselves can often be uninteresting, this one raised a few eyebrows, for reasons including the following:

1.  The affiliate cases list (p. 7) and the corporate ownership statement (p. 13) together provide a shocking look at the web of entities under the FTX umbrella. For a company (collectively) that was run by a small group of people, the number of active business entities is alarming. It’s difficult to comprehend how any meaningful oversight could have taken place, and we’ll dive deeper into these issues further below in The FTX Files.

2.  The Omnibus Corporate Authority (p. 12) interestingly notes that Paul Weiss was, at the time, serving as counsel to SBF himself. In the days thereafter, that would no longer be the case, and we’ll cover that elsewhere in The FTX Files.

3.  The petition was even more interesting for what wasn’t in it, namely a a “Top 20 List.” Pursuant to subsection (d) of Bankruptcy Rule 1007 (as revised in 2017), debtors in voluntary chapter 11 cases “shall file with the petition a list containing the name, address and claim of the creditors that hold the 20 largest unsecured claims, excluding insiders, as prescribed by the appropriate Official Form.” The “Official Form” described therein is Official Form 204. Neither Form 204, nor anything resembling Form 204, was filed with the petition. The issue of creditor identification and disclosure will be contentious and of significance in this case, and will be covered in a separate, dedicated section below.

Key Persons & Professionals
The U.S. Bankruptcy Judge

The FTX case was assigned to Judge John T. Dorsey. Judge Dorsey took the bench in 2019, departing the partnership of Delaware firm Young Conaway. By our calculations, Judge Dorsey is 59, which is relatively young, as bankruptcy judges go. He spent 28 years in private practice as a bankruptcy litigator, the final 16 of those years being with Young Conaway, and at least a few with another notable Delaware firm, Richards, Layton & Finger, before that. Prior to his legal career, Judge Dorsey served in two branches of the United States Armed Forces: in the Army, as an investigator with the Military Police, and in the Air Force, as an ICBM launch officer. Yes, you read that right: the US government trusted a young Judge Dorsey to be in charge of nukes (and during the final years of the Cold War, no less). Presiding over the FTX bankruptcy? Should be a cake walk.

In all seriousness though, FTX won’t be Judge Dorsey’s first time presiding over a complex crypto-related bankruptcy case. The 2020 bankruptcy case of crypto platform Cred is also before Judge Dorsey. (In re Cred, Inc., Case No. 20-12836-JTD) The Cred case has at least a few similarities with FTX’s thus far, as we discuss further on in The FTX Files. The takeaway for us, though, is that Judge Dorsey has a good bit of direct experience here. With how crazy the FTX case is likely going to become (“crazy” being a term of art among bankruptcy lawyers used to refer to cases such as this), the Judge having a general roadmap of likely issues should provide some comfort to all parties involved. The Cred case is almost exactly 2 years ahead of FTX,  and, as discussed below, while bankruptcy judges aren’t bound to follow the decisions of other bankruptcy courts (i.e., the cases don’t set precedent), they also tend not to reverse themselves. In pleadings seeking to go a different way in FTX than was ruled in Cred, expect a lot of fine hair-splitting amidst the facts.


FTX also has a new CEO, appointed just hours prior to the chapter 11 filing. In his supporting declaration filed on 17 November 2022 (D.I. 24), John J. Ray III states that he took over for SBF in “the early morning hours” of the petition date. (¶ 1) This is not as uncommon as the layperson may believe. Professional “restructuring officers” are a common presence in large corporate bankruptcies, and, from time to time, do come on to replace even CEOs. During his 40+ years in the legal and restructuring field, Ray has worked on cases like Enron, Nortel, Residential Capital, Overseas Shipholding, and others. (For more on Ray’s career to-date, see this article by Larry Parnass for The Berkshire Eagle.) We cover Ray’s 17 November declaration further on in The FTX Files, but for our purposes here, we’d imagine that all parties involved are breathing a sigh of relief that it’s John Ray, and not Sam Bankman-Fried, who’s running FTX during the course of its proceedings.

FTX’s Professionals’ Retentions

In terms of Debtors’ professionals’ retentions, FTX is being represented by Sullivan & Cromwell, with partners James Bromley and Andrew Dietderich leading the charge. Interestingly, Dietderich and another S&C lawyer representing FTX in its bankruptcy, Brian Glueckstein, represented Alameda Research (the FTX-related “crypto hedge fund”) in its bid to purchase assets out of the bankruptcy estate of fellow crypto platform Voyager Digital just this past July. (Voyager filed a chapter 11 petition in the U.S. Bankruptcy Court for the Southern District of New York on 5 July 2022.) Leaving aside the larger Alameda issues (e.g., just what did they think they were doing?, etc.), the past few months must certainly have been a wild turn of events for Dietderich & co.

As of 21 November 2022, the Debtors have retained K. John Shaffer, Katherine A. Lemire, Sascha N. Rand and William A. Burck, each of litigation firm Quinn Emanuel, as special counsel to the Debtors.

FTX has also brought on Alvarez & Marsal as financial advisor, with managing director Edgar W. Mosley II leading the engagement. (D.I. 77, 79, 80, 81)

The Debtors have also brought on Perella Weinberg Partners as investment bankers. Kroll will be serving as claims agent. Nardello & Co. and Chainalysis are also providing services in support of the Debtor’s efforts.

On 7 December 2022, the Wall Street Journal reported that the Debtors have retained AlixPartners to provide forensic accounting and asset tracing services. Leading the AlixPartners team is Matt Jacques, who has previously served as the Chief Accountant for the SEC’s Division of Enforcement.

The Official Committee of Unsecured Creditors

On 15 December 2022, the United States Trustee filed a notice that it had formed the Official Committee of Unsecured Creditors (the “OCUC”). (D.I. 231

The OCUC consists of:

1.  Zachary Bruch, an individual.

2.  Coincident Capital International, Ltd.

3.  GGC International Ltd.

4.  Octopus Information Ltd.

5.  Pulsar Global Ltd.

6.  Larry Qian, an individual.

7.  Acaena Amoros Romero, an individual.

8.  Wincent Investment Fund PCC Ltd.

9.  Wintermute Asia PTE. Ltd.

Counsel For The OCUC

On 22 December 2022, the law firms of Paul Hastings and Young Conaway filed a Notice of Appearance, indicating their selection as proposed counsel for the OCUC. (D.I. 295)

Leading the Paul Hastings team are Kris Hansen, Luc Despins, Ken Pasquale, Erez Gilad and Gabriel Sasson

Claims And Claim-Related Information

Filing A Claim

Information regarding the filing of a claim can be found here.

Note: It may be wise to consult to legal counsel prior to filing a claim in a U.S. bankruptcy case. Titan Grey is not a law firm and cannot file claims on behalf of claimants in a bankruptcy case.

Claims Register

The claims register for the FTX bankruptcy case can be accessed here.

The FTX Bankruptcy Case – Early Issues & Pleadings

The Ray First Day Declaration

In a chapter 11 case, the first day declarations are the debtor’s opportunity to tell the court, and the interested public, about the status quo of the underlying business. In trying to understand the circumstances behind a case, the first day declarations are a good place to start.

In FTX, the Debtors’ most informative first day declaration is that made by the new CEO, John J. Ray III (“Ray”) (D.I. 24, supplemented in D.I. 92). Docket Index No. 24 is of primary interest, as Docket Index No. 92, the supplemental supporting declaration, contains just a set of revisions to the entity org chart. In The FTX Files, when we refer to “the Ray Declaration” without further context or clarification, we likely mean the Ray first day declaration (D.I. 24).

The Paragraph Read ‘Round The World

Paragraph 5 of the Ray Declaration has been quoted just about everywhere. Statements in court pleadings, especially those by seasoned restructuring CEOs, aren’t typically this incendiary. But, the statement, incendiary by design, seems to be intended to brace us. Here goes:

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.” (¶ 5)

Everybody, buckle up.


For anyone looking for a more-than-surface understanding of the FTX bankruptcy case, the Ray Declaration is required reading. It’s concise and tightly-written, to the extent that it’d do our readers more good to read the Declaration itself than to read a summary we might prepare. Instead, for those looking for the “quick bites,” what follows is our thoughts on the highlights, as we see them:

1.  Some of the FTX entities are registered with one or more regulators (e.g., the SEC, the CFTC, etc.). Given the situation at hand, we can’t help but wonder if whether, with additional and/or more finely tuned powers and capabilities, a regulator might have caught on to at least some of the likely foul play inside FTX earlier.

2.  There’s an entity org chart included in the Ray Declaration, and revised in the Ray Supplemental Declaration, that is worth having a look at. The number of entities is mind-boggling, especially considering, as we’ll discuss below, the sordid state of affairs of the Debtors’ pre-petition management, oversight and governance. Put simply: how could so few people, with such little experience and such poor processes, properly manage so many entities? The answer, of course, is: they couldn’t.

3. There are several entities, and corresponding businesses, within the FTX umbrella that are solvent non-debtors. These include, e.g., LedgerX LLC d/b/a FTX US Derivatives, a CFTC-registered entity offering futures, options, and swaps on digital assets and other commodities to both US and non-US customers, and FTX Capital Markets LLC, an SEC-registered broker-dealer.

4.  The financial statements, where they even exist (sorry, what?), may not be entirely trustworthy. See, e.g.,

“I have not been able to locate financial statements for Island Bay Ventures, Inc.” (¶ 29)


“…because this balance sheet was produced while the Debtors were controlled by Mr. Bankman-Fried, I do not have confidence in it, and the information therein may not be correct as of the date stated.” (¶ 18)

5.  Most of the financial statements available for the FTX entities are unaudited. Where they were audited, the audits might nevertheless be problematic. (More on this in item 12 of this list, below.)

6.  The Debtors are working off of consolidated balance sheets for each of the 4 Silos, which, to us, makes sense. As of the date of the first Ray Declaration (17 November 2022), the latest consolidated balance sheets available to Ray are as of 30 September 2022.

7.  The Debtors, during their pre-petition operations, had apparently not been listing customer crypto deposits as balance sheet liabilities, though they had been listing customer deposits of fiat currency. In our minds, at this stage, this is perhaps the single biggest problem for FTX and its customer-creditors with crypto deposits. A question we’ll perhaps be returning to is how this compares to the situation in Madoff.

8.  Expect a lot of related party claims in this case. E.g., from footnote 3 to the Consolidated Liabilities of the Ventures Silo:

“Related Party Accounts Payable at Clifton Bay Investments LLC consists of four related-party balances: one with Debtor Alameda Research Ltd, of $1,400 million; one with Debtor Alameda Research LLC, of $68.6 million; one with Alameda Ventures Ltd, of $38.5 million; and one with Debtor West Realm Shires Services Inc. of $2.25 million.” (P. 11)

9.  On 10 November 2022, a day before the first FTX petitions in the Delaware bankruptcy case were filed, the Securities Commission of The Bahamas (“SCB”) froze the assets of FTX Digital Markets Ltd. (a Bahamian entity that is a non-Debtor in the Delaware case), which provides services to FTX Trading Ltd. and is the employer of certain current and former FTX executives and staff in The Bahamas. The provisional liquidator of FTX Digital Markets, Brian Simms, KC, has filed a chapter 15 petition seeking recognition of the Bahamian proceedings in the U.S. Bankruptcy Court for the Southern District of New York. Additionally, on 11 November 2022, the directors of FTX Express Pty Ltd and FTX Australia Pty Ltd (Australian entities that are non-Debtors in the Delaware case) appointed Scott Langdon, John Mouawad and Rahul Goyal as voluntary administrators.

10.  Corporate governance has been an issue for the Debtors. To remediate, Ray has appointed several independent directors amongst the FTX Silos, as follows: Mitchell I. Sonkin (WRS Silo), Matthew R. Rosenberg (Alameda Silo), Rishi Jain (Ventures Silo), Joseph J. Farnan (Dotcom Silo), and Matthew A. Doheny (Dotcom Silo). The Debtors plan on holding joint board meetings to implement controls, protect and recover assets, investigate claims against the founders and third parties, cooperate with foreign proceedings, and maximize stakeholder value, across the entire scope of Debtors’ business entities. However, Ray does note the likelihood of latent intercompany claims, and addresses the potential engagement of independent counsel to represent various Debtor entities in the context of such claims.

11. Some other extremely quotable lines:

“The FTX Group did not maintain centralized control of its cash.” (¶ 50)

“Because of historical cash failures, the Debtors do not yet know the exact amount of cash that the FTX Group held as of the Petition Date.” (¶ 52)

“Effective cash management also requires liquidity forecasting, which I understand was also generally absent from the FTX Group historically.” (¶ 54)

In the bankruptcy proceedings of a group of financial services companies, this is not a particularly good thing to hear. Failures included “the absence of an accurate list of bank accounts and account signatories” and “insufficient attention to the creditworthiness of banking partners around the world.” As remediation, the Debtors will be collecting and transferring cash assets into centralized accounts for each Silo, with such accounts being at US financial institutions that are approved depository institutions in accordance with guidelines from the Office of the U.S. Trustee. The Debtors’ Cash Management Motion (D.I. 47) contains further detail.

Ray further indicates that the Debtors are standing up systems in order to produce reliable cash forecasts, as well as to produce cash reporting as necessary for the Code-required submissions of Monthly Operating Reports to the Court.

Furthermore, Ray indicates that it will take some time before the Debtors are able to produce reliable historical financials for the FTX entities. The following quote, considering the fact that the Debtors are a group of financial services companies, is a bit unnerving:

“The Debtors do not have an accounting department and outsource this function.” (¶ 58)

12.  At least some audited financials were produced, but, as far as the post-petition Debtors have been able to find, only on an annual-period basis, and only for the WRS and Dotcom Silos (the two Silos with third-party investors). Debtors have not, as of the filing date of the Ray declaration, found any audited financials for either of the Alameda or Ventures Silos. Armanino LLP is the third-party firm which performed the audit of the WRS Silo’s annual financial statements ending 31 December 2021. Prager Metis is the third-party firm which performed the audit of the Dotcom Silo’s annual financial statements ending 31 December 2021. However, we think it appropriate to note that the existence of these audited financials is not the end of their story, but the beginning. Quoting directly from the Ray Declaration:

“I have substantial concerns as to the information presented in these audited financial statements, especially with respect to the Dotcom Silo. As a practical matter, I do not believe it appropriate for stakeholders or the Court to rely on the audited financial statements as a reliable indication of the financial circumstances of these Silos.” (¶ 56)

13.  As with the presentation of information regarding the Debtors’ pre-petition financial operations, the Ray Declaration paints a dystopian picture of the human resources function—or lack thereof—of the pre-petition Debtors. Again, it’s perhaps simplest to quote directly, and the Ray Declaration reads:

“At this time, the Debtors have been unable to prepare a complete list of who worked for the FTX Group as of the Petition Date, or the terms of their employment. Repeated attempts to locate certain presumed employees to confirm their status have been unsuccessful to date.” (¶ 59)

14.  Disbursement Controls were likewise problematic. Another shocking quote:

“…employees of the FTX Group submitted payment requests through an on-line ‘chat’ platform where a disparate group of supervisors approved disbursements by responding with personalized emojis.” (¶ 59)

Furthermore, it appears that FTX corporate funds were used to purchase homes (in at least some cases, recorded in the personal name(s) of whom for which they were purchased) and personal items for employees and advisors, with apparently no documentation for certain of the transactions as loans. We’d like to point out, for those of our readers looking for some context here, the notion of fraudulent conveyance in bankruptcy. Expect this to become a wholly separate section of The FTX Files as this case progresses.

15.  The definition of irony is “a state of affairs or an event that seems deliberately contrary to what one expects and is often amusing as a result.” We wouldn’t exactly call the following “amusing,” but it is, perhaps, the clearest picture of irony we’ve seen in a while, bearing in mind that the Debtors offer their clients, inter alia, custody services for digital assets:

“The FTX Group did not keep appropriate books and records, or security controls, with respect to its digital assets…Unacceptable management practices included the use of an unsecured group email account as the root user to access confidential private keys and critically sensitive data for the FTX Group companies around the world, absence of daily reconciliation of positions on the blockchain, the use of software to conceal the misuse of customer funds, the secret exemption of Alameda from certain aspects of’s auto-liquidation protocol, and the absence of independent governance as between Alameda (owned 90% by Mr. Bankman-Fried and 10% by Mr. Wang) and the Dotcom Silo (in which third parties had invested).” (¶ 65)

What’s most shocking to us, regarding the above, is that this case is a chapter 11, and not a chapter 7. The Ray Declaration elsewhere mentions a successful reorganization of the Debtors’ businesses. However, given the above, to state what we mean colloquially: how does anyone even come back from that? Why would any crypto holder want to continue to trust a company born of this mess with the custody of their crypto assets?

Continuing, the Debtors are currently working to secure all of the FTX Group’s digital assets, and have, as of the date of the Ray Declaration, managed to secure approximately $740 million in new cold wallets. The $740 million in assets belongs to one or more of the WRS, Alameda or Dotcom Silos, but the Debtors: a) haven’t been able to determine the correct allocation; and b) aren’t confident they’ll actually be able to determine the correct allocation.

The Debtors note that the above figure of $740 million does not include what they state is “at least $372 million of unauthorized transfers initiated on the Petition Date.” (¶ 66) This is, in our minds, perhaps the single-biggest and most pressing issue for the Debtors, and one for which the Debtors and their investigators and professionals face grim chances at meaningful recovery. There’s also the matter of “the dilutive ‘minting’ of approximately $300 million in FTT tokens by an unauthorized source after the Petition Date.” (¶ 66) And, perhaps fittingly, “the failure of the co-founders and potentially others to identify additional wallets believed to contain Debtor assets.” (¶ 66) The Debtors have engaged professionals of various core competencies and areas of expertise (as we’ve discussed elsewhere in the FTX Files) to assist in investigating and effectuating recoveries, but this process will take time.

16.  The Ray Declaration indicates that the Debtors had investments in assets other than crypto valued in the billions. The companies in the Alameda and Ventures Silos, which is where we presume most of these investments were held, lack appropriate books and records. The Debtors are now working to locate the investments.

17.  To say that recordkeeping was not a strong suit of the pre-petition Debtors is perhaps the understatement of the year. Ray, in his Declaration, is more direct:

“One of the most pervasive failures of the business in particular is the absence of lasting records of decision-making. Mr. Bankman-Fried often communicated by using applications that were set to auto-delete after a short period of time, and encouraged employees to do the same.” (¶ 71)

and, furthermore, because it apparently needed to be said,

“The Debtors are writing things down.” (¶ 72)

The use of an auto-deleting messaging system, to us, speaks to intent. Choosing to use such a system versus, say, e-mail, is unlikely to be either by happenstance, by accident, or otherwise unintentional. In the course of any investigations into wrongful and potentially criminal conduct by FTX insiders, this is overwhelmingly likely to come up.

Likewise, in the untangling of any mess, writing things down is usually a good first step. Bravo.

18.  The Debtors mention the existence of regulated and/or licensed subsidiaries which may have going concern value. In an effort to realize this value, the Debtors are taking protective measures, and have engaged an investment bank to value and explore the sale of these businesses. Given what has, and is sure to, come to light about the Debtors’ pre-petition business practices, this is sure to be a difficult project.

19.  In one of the most puzzling twists to this case, the Ray Declaration states that:

“The Debtors have cryptocurrency, digital assets and other critically sensitive data in repositories that have been the subject of unauthorized attempts to access. The Debtors have implemented certain defensive measures. The Debtors have been advised that attempts to access this property of the estate may create a risk of its loss to unauthorized persons.” (¶ 75)

Sorry, what?

So, there’s digital assets and data stored online somewhere, and hackers have tried to access those assets and that data. We’re not sure what “certain defensive measures” are, but either those measures, or the hacking that required them, have somehow rendered the Debtors unable to access the very things that they’re supposed to be defending? This sounds like the defensive measures are working a bit too well. There’s no further detail provided on the unauthorized access attempts nor the defensive measures taken, and we’re left with more questions than answers here.

The Declaration indicates that the above set of facts is contributing to the Debtors’ inability to provide information with respect to its customer-creditors, nor to create a fulsome “Top 50 List.” We discuss these issues in further detail in a separate section of The FTX Files, below.

20.  Finally, and perhaps saving the best for last, is the the matter of “Corporate Communications” as covered by the Ray Declaration. To summarize succinctly, Ray, as of the date of his Declaration, notes, “Mr. Bankman-Fried, currently in The Bahamas, continues to make erratic and misleading public statements.” (¶ 76). Even that’s a rather diplomatic way to put it. Fundamentally, Ray reiterates to the Court that Bankman-Fried is no longer CEO of the Debtors and does not speak for the Debtors. One would hope not. We cover Bankman-Fried’s ongoing communications with the general public in a separate section of The FTX Files.

The Creditor Procedures & Disclosure Issues

The Missing Top 20 List

As discussed above, FTX did not file a Top 20 List with its petition on 11 November 2022. Pursuant to Bankruptcy Rule 1007(d), it should have. Rule 1007(d) was added as part of revisions performed in 2017, but the concept of filing a list of top unsecured creditors with a voluntary chapter 11 petition is not new.

To highlight just how odd it is to not see a creditor list filed with a petition, consider that even in Lehman Brothers, a case of the bankruptcy of a large financial institution (similarity? ), which had vast and complex holdings (), which had massive failures of internal controls (), and which filed an emergency, 11th hour petition (), Lehman nevertheless managed to include a creditors list in its filing.

Side note: a question we’re going to be asking ourselves over and over throughout this case is how did something so disorganized get so big? We were forced to ask this question throughout Lehman. And here we are, asking it again.

The Creditor List Motion

On 14 November 2022, FTX filed a motion (the “Creditor List Motion”) (D.I. 9) seeking to, inter alia, modify creditor list requirements and authorize e-mail service to certain parties. Unlike motions to use cash collateral, pay pre-petition payroll, pay critical vendors, etc., the Debtors’ motion here is not, in our experience, a typical “first day” motion.

One List To Rule Them All

The Debtors’ first request seeks to modify the requirements of Rule 1007(d) (which would require, in relevant part, that each debtor file a list of its top 20 unsecured creditors) in order to allow the jointly administered debtors to file a single list of the top 50 unsecured creditors. Given the scope and scale of the jointly administered cases (with over 100 debtor entities), and Debtors’ representations regarding overlaps, lack of material creditors for some of the entities, etc., the requested relief seems logical.

E-Mail Me, Maybe

The Debtors’ second request seeks to allow notices to be served on creditors via e-mail, instead of by mail as generally required by Bankruptcy Rule 2002(a). The Debtors make several representations here in support of their request, e.g., that there are presently over 100,000 creditors identified, that the number may well be over 1 million as the case progresses, that most of the identified creditors are customers of the Debtors, and that, because the Debtors operate an exclusively online platform, all customer communication is conducted via e-mail. Again, this all makes sense. Of course, FTX has e-mail addresses for its customers ready to go, right? Maybe, maybe not.

Maybe this is us just being persnickety, but, in their motion, the Debtors: a) request “authority to serve creditors via e-mail, where an e-mail account is available to the Debtors” (emphasis added) (¶ 23); but also, b) state that “the customer base currently receives all notices electronically from the Debtors.” Puzzling. In what instance would the Debtors not have an e-mail address on file for a customer? Even if that customer has unsubscribed from all e-mail notices (and even then, there are some kinds of notices for which, to the best of our understanding, one generally cannot unsubscribe from absent account closure), wouldn’t an e-mail address nevertheless be on file from the customer intake / account opening process? While bankruptcy courts have broad latitude to determine appropriate notice procedures, FTX’s purported inability in some cases to contact customers directly seems problematic.


Finally, a cryptic footnote at the bottom of page 5 of the motion indicated that the Debtors would address “the need to redact certain customer confidential information” in a separate filing. Curious? So were we. See below.

The Creditor Matrix Motion

On 19 November 2022, FTX filed a motion (the “Creditor Matrix Motion”) (D.I. 45) seeking to, inter alia, maintain a consolidated creditor matrix, and redact or withhold certain confidential information of customers and personal information of individuals. As with the motion discussed above, this motion, in our experience, is a bit unusual. With that being said, the facts of this case are likewise unusual.

So. Many. Creditors.

The Debtors’ first request relates to harmonizing the requirements of federal and local rules of bankruptcy procedure with respect to the compilation and administration of a list of creditors (the “Creditor Matrix”). The Debtors assert that it would be far simpler and more expedient to maintain a single consolidated matrix rather than one for each debtor, because of the 100+ debtors, the potentially 1 million or more creditors, etc. Beyond that is where things get considerably more interesting. The motion references the poor state of the Debtors’ books and records, with perhaps the most damning sentence reading, “Creditor information, and in particular customer information, is not clearly labeled or identifiable by the Debtor.” At this time, we’re able to say for certain that that is “not good.”

But perhaps even wilder is the notion that what information the Debtors do have at their disposal is inaccessible, at least in part, because of a cybersecurity breach. The motion cites the declaration of FTX interim CEO John J. Ray in support of FTX’s petition, filed on 17 November 2022 (D.I. 24), and specifically paragraph 75 thereof. Paragraph 75 reads, in relevant part, that the assets of the Debtor (presumably here including its customer lists)  “have been the subject of unauthorized attempts to access…[and that] attempts to access this property of the estate may create a risk of its loss to unauthorized persons.” Fundamentally, what this means is that hacking / cybersecurity breaches are at least part of the reason why the Debtors aren’t able to comply with the rules governing preparation of a Top 50 List or a Creditor Matrix. This may well be novel. Furthermore, to note, we will cover the Ray Declaration, and the topic area of hacking / cybersecurity as it pertains to the FTX bankruptcy and FTX generally, separately in other sections of The FTX Files.

Keep It Confidential

The Debtors’ second request gets to what was mentioned in that footnote of the motion discussed above, namely, a request to redact and keep confidential FTX’s customer information. But before we dive into that, it’s important here to get one thing straight: the difference between a customer and a creditor in the context of this case. Customers are users of FTX. Creditors are people / entities to whom FTX owes money. Not all creditors are customers (e.g., an unpaid vendor), and not all customers are creditors per se (e.g., a customer with zero balances at FTX), but, as FTX asserts in this motion, “All of the Debtors’ customers are creditors.” It’s important to distinguish between “customer-creditors” and “non-customer-creditors,” though it seems that the vast majority of the creditors in this case (and most, if not all, of FTX’s top 50 creditors) are, in fact, customer-creditors.

The Debtors cite to §107(b)(1) of the Bankruptcy Code, which allows bankruptcy courts to take measures to protect trade secrets and other forms of confidential / commercial information. There’s also the matter of Bankruptcy Rule 9018. The Code provision and Rule make sense: if we expect a chapter 11 debtor to emerge from bankruptcy and survive as a going concern, we can’t have them lose their competitive advantages (e.g., super cool proprietary tech) as a necessary consequence of going through a restructuring.

However, it’s what the Debtors here want to protect that creates a bit of an issue. They want to redact from all public documents—including the Creditor Matrix, the Top 50 List, and other court documents which are typically filed unredacted—the names and identifying information of their customers, and, in light of what we’ve just discussed, therefore, the lion’s share of their creditors. The main reason given is that the “customer list, and related customer data, is an important and valuable asset of the Debtors,” and furthermore, that “the Debtors maintain their customer list in strict confidence.” We have some thoughts.

First, let’s talk about the customer list as “valuable asset.” The Debtors assert that “public dissemination of the Debtors’ customer list could give the Debtors’ competitors an unfair advantage to contact and poach those customers, and would interfere with the Debtors’ ability to sell their assets and maximize value for their estates at the appropriate time.” Really? Let’s talk about what FTX does in basic terms: you give them your money (in regular currency, crypto, etc.) to hold on to for you, and then on their platform you can also trade it, etc. Now let’s pretend that we are an FTX customer: our money with FTX is either gone or frozen (because FTX has paused withdrawals and also because of the automatic stay), so even if FTX’s biggest and best competitor were to call us up, or send a Ferrari to our house with a bow on it, we wouldn’t be able to transfer assets from FTX to them. So, where’s the risk of poaching? Not really there. But what about money that isn’t currently with FTX? Well, FTX has stopped onboarding new clients, though it escapes us how a prospective client of a crypto platform would, at this time, want to choose FTX, even if they could. And existing customers? We’re not, at this time, sure that existing customers could even make new deposits, but perhaps more realistically, why on earth would they? Again, we fail to see where the risk of poaching is.

But poaching aside, there’s also the matter of Debtors’ assertion that public dissemination of their customer list “would interfere with Debtors’ ability to sell their assets and maximize value for their estates at the appropriate time.” How? We’re trying to think this one through, but, how? Debtors fail to provide any context around that assertion, and try as we might, we’re failing to come up with any.

There’s also a question of in exactly how much “strict confidence” did the Debtors keep their customer list. Given what we are slowly learning about the state of internal controls at FTX, that’s simply not an assertion anyone should take at face value. At time of writing, we have no actual reason to believe that the confidentiality of the customer list was willfully breached by FTX in any way, but, nevertheless, one can’t help but wonder.

Debtors rely on rulings from two cases (both crypto-related) to support their request for relief to redact not just customer addresses and e-mail addresses, but also customer names: the 2020 case of In re Cred, and the 2022 case of In re Voyager Digital Holdings. The Cred case is presided over by Judge Dorsey, whose name you might recognize. In Cred, Judge Dorsey authorized the redaction of customer names, addresses, and e-mail addresses, and what was filed on the docket was very blank list of creditors. (In re Cred, D.I. 59)

Bankruptcy law nerd note: it is important to note here that bankruptcy court rulings are entirely non-precedential, meaning that they do not create binding precedent on any other court, including other bankruptcy courts. So, just because a cited case may be on-point with respect to the facts, a ruling in that case would be considered only as “persuasive” by the later court, but not binding. (For more on this, please see this extremely helpful 2018 article from the American Bankruptcy Institute (ABI) Journal.)

So, while Judge Dorsey isn’t bound by his ruling on the motion in Cred, one might believe that he’ll be rather persuaded by it.

What he may be likewise persuaded by, as cited by the motion of the debtors in Cred, is a Second Circuit ruling in Video Software Dealers Ass’n v. Orion Pictures Corp. (In re Orion Pictures Corp.), in which the appellate panel held that protective relief under §107(b) must be granted if the information is confidential and commercial in nature, regardless of whether it is or is not considered a trade secret. (Note, however, that Delaware’s federal courts are under the Third Circuit, not the Second, and so again, this isn’t binding precedent.) In that case, however, the information for which protection was sought and granted was a license agreement between two business entities and documents related thereto. In our minds, that isn’t quite the same as a customer list, particularly when the customer list is fundamentally equivalent to the Creditor Matrix, disclosure of which, if you recall, is typically required under the Rules.

Ultimately, it’s our opinion that it’s unlikely that Judge Dorsey will rule here in contrast to his ruling in Cred. The requests for relief and bases therefor are roughly identical between the instant motion and that in Cred, and it will take some real jiu-jitsu-ing of the facts in order to create a clear distinction between this issue in the two cases. What’s more, the Debtors have represented to the Court that they will be providing an unredacted version of the Creditor Matrix and the Top 50 List, along with other documents, to the US Trustee, counsel for any to-be-formed official committees, and to any other party to which the Court may order disclosure.

Now, the real question here is why do we care so much about disclosure of creditors? For one, open access to proceedings is a hallmark of the justice system of the United States. (And yes, we are standing on a soapbox here.) Access to creditor information is an essential part of ensuring the fairness and transparency of the bankruptcy process, and it is not something courts should be too willing to deny. But moreover, the ability of creditors to be aware of and participate in proceedings which may affect their rights and claims is vital. At this stage, prior to the formation of an Official Committee of Unsecured Creditors, the public is trusting the Debtors to make good on obligations to notify creditors. And given what we’ve been made aware of regarding the state of their internal controls and processes thus far, we query whether such trust is well placed. This is not a question of intentions, particularly with a new CEO and independent directors in place, but rather one of sheer capability. In the rank-and file, the same people pulling levers and hitting switches at FTX pre-bankruptcy, are likely for the most part the same as those who are doing it now and will be doing it going forward.

GDPR To The…Rescue?

The Debtors’ third request is similar to the second, discussed above, except it’s sought on wholly different grounds. Whereas in the above, redaction was sought for the purpose of protecting FTX’s competitive position, here, it’s sought for the purpose of protecting customer-creditors themselves. Basically, under §107(c) of the Code, the Bankruptcy Court may, upon showing of cause, protect an individual from disclosure of their information where the court finds that such disclosure “would create undue risk of identity theft or other unlawful injury to the individual or the individual’s property.” The type of information for which protection from disclosure can be afforded by the court includes, inter alia, “any means of identification…contained in a paper filed, or to be filed, in a case under [the Bankruptcy Code].” The Debtors cite actual examples of where, to paraphrase, people were located and/or stalked from having their personal information included in a creditors’ matrix. We can’t argue with the proposition that that is a harm that should be prevented to the greatest extent.

Debtors also cite to their compliance constraints under the UK’s Data Protection Act (“DPA”) and the EU’s General Data Protection Regulation (“GDPR”), which would bar them from disclosing the personal information of those customers of theirs subject to protection under those statutes. Given its global exposure, it’s not difficult to believe that FTX itself is generally subject to DPA / GDPR compliance requirements. It also make sense that courts have granted relief in light of these circumstances in other cases, and Debtors cite several. The last thing the Debtors need here is to be caught between the requirements of the Bankruptcy Court and the UK / EU regulators, and courts in the US have recognized that. A question here is whether FTX would be able to narrowly comply, i.e. by identifying only those customers (and any other relevant parties) covered under DPA / GDPR requirements and redacting information with respect to only those persons. This is becoming a common refrain, but again, given what we have been made to understand about the state of the Debtors’ internal controls, the answer is probably no.

Notice? We’ve Got Your Notice Right Here Pal…

The Debtors’ fourth request covers the establishment of procedures to provide notice to creditors. As discussed above, the Debtors have retained Kroll to be the “Claims and Noticing Agent” (or “claims agent,” for short) in the case. The claims agent is a company whose primary purpose in a bankruptcy is to facilitate all matters related to creditor claims, e.g. preparing creditor lists, notifying creditors, receiving proofs of claim, maintaining a database of claims (a/k/a “claims register”) etc.

The Debtors have represented that they will serve notice on creditors via e-mail, but recall from above, the Debtors may not possess e-mail addresses for all customers (and therefore for all creditors). As a solution, the Debtors have proposed, as allowed under Rule 2002(l), to notice creditors by publication, which used to mean, e.g., in newspapers, but now can mean, e.g., on a website. In this case, in addition to sending notices by e-mail, Debtors will cause the “Notice of Commencement” (a notice of the commencement of the bankruptcy case of the Debtors) to be posted on the claims agent website for the FTX cases. Debtors assert that they believe that “such publication of the Notice of Commencement provides sufficient notice to persons who did not otherwise receive notice by e-mail.” Our view is, well, maybe.

For one, when publication was done via newspapers, the court could examine the prominence of the newspapers, their circulations, and other factors. The effort, in large cases, was typically massive. For example, in the year 2000 bankruptcy case of Owens Corning, the Debtors published notices (in the cited example, of the claims bar date, or last date for a creditor to file a claim) in The New York Times (national and international editions), The Wall Street Journal (national and international editions), USA Today, approximately 250 regional or local newspapers in places where the Debtors did significant business, and approximately 35 trade publications, in addition to other forms of notice made. That effort, at least on face, seems to be several orders of magnitude greater than simply posting the notice on a website.

Regarding the claims agent website itself, it’s certainly not a bad place to start. While the Debtors in their motion list the URL as “,” that URL actually redirects to “,” which seems like it’s something the Debtors should get right, but is also not that big of a deal. (And at least the redirect doesn’t come with the very common “insecure site” warning for domain forwards / redirects.) Using Moz, we’ve analyzed the website and found that, as of the time of this writing, the “” parent domain to have a Domain Authority score of 69, and with the specific page for the FTX case (as referenced in the URL listed above) to have a Page Authority score of 39. In our opinion, these are not bad numbers, all things considered. Sure, they’re nowhere The New York Times’s Domain Authority score of 95 (which is significantly higher than 69, as the scoring scale is logarithmic), but for what the website is, and what the page is, these numbers aren’t bad. Searching the words “ftx bankruptcy” on Google at the time of this writing, the claims agent website appeared on the first page of results, ranked 6th. A search for “cred bankruptcy,” however, brings that case’s claims agent website up first. To be clear, however, we’re dissecting relatively minor details with respect to SERP, and we’d expect the stats of the FTX claims agent page to climb steadily as this case progresses.

Still, we query whether simply posting the Notice of Commencement on the claims agent website would satisfy due process requirements for notice to known creditors of FTX who do not receive notice via e-mail or physical mail. The holding of the U.S. Supreme Court in Mullane v. Central Hanover Bank & Trust Co. offers something to think about here. First, some caveats: 1) the case was decided in 1950, and at least a few things relevant to providing notice to people have changed in the years since; and 2) the case concerned the judicial settlement of accounts of a common trust fund pursuant to what was then §100-c of the New York Banking Law, not a bankruptcy case filed under federal bankruptcy law (which, at the time, would have been the Chandler Act, but is now the Bankruptcy Reform Act of 1978, as revised). Nevertheless, conceptually, the case is instructive, as it deals directly with the issue of under what circumstances would notice by publication satisfy the due process requirements of the 14th Amendment, and, furthermore, under what circumstances would it not. In Mullane, SCOTUS held that notice by publication would satisfy due process requirements as to “beneficiaries whose interests or addresses are unknown to the trustee,” but that it would not for “known present beneficiaries of known place of residence.” Quoting further (at least in part due to the exquisite writing), “Where the names and post-office addresses of those affected by a proceeding are at hand, the reasons disappear for resort to means less likely than the mails to apprise them of its pendency.” (p. 318) It also bears mentioning that under the facts in Mullane, the trustee possessed the names and addresses of beneficiaries who were notified only by publication. For our purposes here, in order to escort the “olde tyme” SCOTUS of Mullane into the paper-mail-free, “digital nomad” era of the 21st century, let’s forget about physical addresses and consider e-mail as an adequate substitute. This substitution also has externalities with respect to the cost of providing notice (e.g., stamps. remember those?), and these externalities would flow for the proposition that notice should be easier / less burdensome to provide here, not more.

So, where does that get us with respect to FTX? One would think that a customer’s physical address would be captured in the account creation process. But, 1) we’ve never signed up for an account with FTX, or with any other crypto exchange; 2) we haven’t (yet) looked into whether things like AML/KYC or similar laws and/or rules applied to FTX at any time when new accounts could have been created / and, if so, presumably still do apply; and 3) if any such law or rule did / does apply, we nevertheless don’t have any visibility into whether FTX did/does, or even made any attempt to, comply with said laws and/or rules. We’re aware that in the crypto world, privacy is next to godliness, and it might, in the privacy-prioritizing logic of the crypto space, be acceptable to a crypto investor to deposit funds into an institution that doesn’t require much in the way of means to contact said investor should something go wrong. However, this is what results.

FTX should be able to identify and proactively contact its customers. The reality is that, for some, it might not be. These customers occupy something of a limbo realm in the logic of SCOTUS in Mullane. They’re not “unknown,” they are or should be “known,” and the Debtors should have, for each of them, our 21st century proxy for a “known place of residence,” namely, an e-mail address. But, recall from our earlier discussion of the Debtors’ motion of 14 November 2022 (D.I. 9) in which the Debtors sought authorization to serve certain parties by e-mail, the motion indicated by implication that the Debtors may not have e-mail addresses for all customers. (See p. 8).

It logically follows, then, to query whether the Debtors’ failure to maintain an e-mail address on file for some customers should subject the Debtors to a lower due process standard with respect to such customers. We’d posit that the answer depends on whose action or omission caused the e-mail address to not be on file. If the fault lies with FTX, the answer should clearly be “no.” However, if this was by design of the affected customers, each in their own case, then, absent an overt legal or regulatory burden on FTX to require, inter alia, e-mail addresses to be kept on file (e.g., an applicable AML/KYC statute), the answer is less clear. And nevertheless, we’d assume that such customers were not warned by FTX, at time of declination to provide e-mail address information, that the absence of such information would limit such customers’ access to due process certain cases, including the instant case. To throw yet another wrench into the works, if the absence of the e-mail addresses is the product of the actions of some malicious third party (e.g., a hacker), we would nevertheless be bound to query whether FTX’s cybersecurity countermeasures against this seemingly eminently foreseeable risk were adequate, especially given the fairly clearly large exposure of FTX to the same. And yet again, our leitmotif of The FTX Files makes its way to center stage: given what we’ve been led to believe about the state of internal controls at FTX, we might reasonably assume that the answer is “no.”

The Consolidated List Of Top 50 Creditors

On 19 November 2022, FTX filed a consolidated list of its top 50 creditors (D.I. 51). Note that the list is of creditors’ unsecured claims only, and excludes the claims of any “insider,” as defined under §101(31) of the Bankruptcy Code.

Rows And Columns

The first column of the list bears the heading “Name of creditor and complete mailing address, including zip code.” In each of the 50 rows, this column simply reads “[On File].” For the next column, “Name, telephone number and email address of creditor contact,” we get the same “[On File]” next to the word “Email.” This all tracks re: Debtors’ motions discussed above, so no surprises there.

As for the third column, “Nature of the claim,” we see that each of the claims is labeled as “Customer.” Again, per Debtors’ representations, no surprises there either.

The Interesting Part

The fourth column is where things get interesting. The column requires Debtors to note whether each listed creditor’s unsecured claims are contingent, unliquidated or disputed. In each row, the claims are all noted as “unliquidated,” (i.e., not ascertained in amount).

Yet, in the last column (for claim amounts), the Debtors do manage to list out an amount, denominated in US Dollars, of each listed creditor’s total unsecured claims. Obviously, this makes sense, because Debtors would need a sense of size of claim in order to rank them / make a list of the top 50.

But what does this actually reflect? We presume, for each listed creditor, the total value of their assets in custody with FTX (or at least that should be in custody with FTX), converted, as necessary, from whatever cryptocurrency they’re in into USD as of the petition date. In at least one recent case, that of Mexican airline Grupo Aeromexico, that’s the basis on which the Debtors’ plan of reorganization determined the allowance of claims denominated in foreign currency, and that plan was subsequently confirmed.

This also presumes, however, that FTX’s customers’ holdings will be treated as property of the estate, and that’s not a given. There’s a lot to discuss on this topic, particularly because: a) there are other pending cases (e.g., Voyager, Cred, etc.) in which these issues are being, and will continue to be, be ruled upon; and b) the treatment of these issues in both those cases and this one will likely have huge impacts on the future of crypto in general. And so, as one might have guessed, we’ll be covering this in a separate section of The FTX Files.

The Media Intervenors Motion

On 9 December 2022, a group of media outlets consisting of Bloomberg, The Wall Street Journal, The New York Times and The Financial Times (the “Media Intervenors”) filed with the Court a motion to intervene for the purpose of objecting to the Creditor Matrix Motion (D.I. 45). (D.I. 196) This was not exactly unexpected. As we’d previously indicated, the sealing of the Creditor Matrix is unusual, and sure to be a point of contention in this case.

Evidentiary Burden

The Media Intervenors cite case law for the proposition that, in seeking to protect certain information filed before the court, the movant (here, the Debtors) has a burden of “establishing through evidence” that the information they wish to protect should be protected. Importantly, the Media Intervenors note that judges in similar cases have held that there is a distinction between “evidence” and “argument” in the context of carrying this burden. (¶ 14)

Furthermore, they cite to the Creditor Matrix Motion in arguing that the content therein, with respect to the proposition that the Debtors’ customers’ identities are an asset of the Debtors such that disclosure could pose adverse business consequences for the Debtors, is mere argument, and not evidence (¶ 15), and furthermore does not satisfy the Debtors’ burden under applicable case law. (¶ 16)


Perhaps the best argument of this motion, in our minds, comes from the Media Intervenors’ citation of recent (non-binding, persuasive only) ruling in the bankruptcy case of In re Celsius Network LLC before the U.S. Bankruptcy Court for the Southern District of New York (Case No. 22-10964-MG) in which the court therein authorized the redaction of customer contact information, but not of customers’ names. (¶ 19) As we’ve discussed above, decisions in bankruptcy cases do not set binding precedent upon other bankruptcy courts. However, being that the debtor in Celsius is also a crypto business, and that the case is extremely recent, we would expect this case to be highly persuasive. It will be incumbent upon the Debtors to argue the distinction, should they wish to prevail on full redaction.

The GDPR vs. The Code

The Media Intervenors also offer arguments against the Debtors’ assertions that the data protection laws of the UK and the EU (collectively referred to as the “GDPR”) should apply to certain relevant customers of the Debtors’ and their information. The Media Intervenors state that the Debtors “provide no legal authority explicitly dictating why the GDPR should apply” to this case in the US, and fundamentally, that in a proceeding before a US court, why foreign laws would trump US laws. (¶ 20)

U.S. Bankruptcy Code §107(c) is at issue here. The Code section provides a bankruptcy court with the ability to protect individuals from having their information disclosed when the disclosure would harm the individual. There’s a bit of a nuance here: it’s about harm to the individual. Debtors have demonstrated that violating the GDPR would subject them (viz., the Debtors) to fines and penalties, but the Media Intervenors argue that this isn’t the harm that §107(c) is designed to be used to prevent.

The way in which the Media Intervenors phrase it, though, is more than a little problematic. “…Debtors have failed to show that public disclosure of foreign citizens [sic] personal data in violation of the GDPR would constitute an unlawful injury to those individuals because the financial penalties (injury) would be imposed against Debtors under those laws.” (¶ 20) This argument relies on logic so faulty, it’s almost ridiculous. The Media Intervenors’ argument wrongfully ignores the notion that there may be two different kinds of harm existing simultaneously and arising out of the same nexus of fact: 1) the harm the conduct creates; and 2) the harm from the punishment for the conduct. This is sort of how regulation generally works.

For instance, if Titan Grey branched out into mining rare earth minerals in Michigan, and in doing so, we contaminated the water supply of a neighboring town, just because the EPA would slap us with huge fines doesn’t mean that the townspeople weren’t harmed by, for example, having drinking water that catches on fire. Both harms can coexist. Moreover, it’s generally when the first (actual) harm is bad that the second (fines and penalties for regulatory infractions) harm is “extra bad.”

Fines for violating the GDPR are typically of an “extra bad” nature. See, e.g., these numbers. And given that one of the main goals of a bankruptcy case is to preserve the value of the debtor’s estate, we don’t see how a ruling which forces potentially massive regulatory penalties upon the Debtors works towards that goal.

There’s also a weird foreseeability argument here. The Media Intervenors cite to a year 2000 bankruptcy case out of the Western District of Texas (In re Blackwell) for the proposition that, because the debtors in that case maintained offices in the United States, parties whose information is being disclosed should have anticipated the possibility of such disclosure occurring, because “it was at least foreseeable that the laws of this country could be applied…” (¶ 20) 

In the GDPR context, we’d imagine that the EU’s perspective is that the persons covered by their laws should be able to assume that their protections are being respected by organizations with which they do business. In the B2B context, before inking a deal, companies often request representations and warranties from each other regarding compliance with law. Even in something so simple as a sales agreement, there can sometimes be due diligence on this point. The same can also be true of sophisticated individuals making financial investments, like in the facts in Blackwell. However, it’s vital to remember that in the context here, we’re talking about a public facing online platform whose business catered to the cryptocurrency trading needs of even ordinary individuals. It’s unreasonable to expect an ordinary consumer to make a diligence request of FTX for a summary of their GDPR compliance program, and analyze it in the hypothetical context of a US bankruptcy proceeding of FTX, prior to signing up for an FTX account and depositing some funds into it. So, when we the argument made in the Media Intervenors Motion citing case law for the proposition that customers should have seen the possibility of their identities being disclosed coming (e.g., ¶ 20), we can’t help but shake our heads.


The Media Intervenors then proceed to engage in a bit of reductio ad absurdum, with (perhaps rhetorical) questions such as, “Will any creditor who wants to file a motion or an adversary proceeding be entitled to do so anonymously? Would preference actions redact the names of defendants who are creditors?” (¶ 21) The Court has already stated that proofs of claim will not be filed anonymously, which the Media Intervenors acknowledge. (¶ 22) It seems reasonable to assume, then, that the answers to these great questions would both be in the negative.

The thing that the Media Intervenors fail to achieve, though, is to draw any meaningful distinction between this case and Cred. Given how Judge Dorsey himself ruled on a similar motion in that case, this would seem like top priority. Absent that, we don’t see how this motion is likely to succeed.

Intervention Granted

On 19 December 2022, Judge Dorsey granted the motion to intervene. (D.I. 255) Note, however, that this is not a grant of any objection, but rather just as recognition of the Media Intervenors as having proper standing to object.

The United States Trustee Objection

On 12 November 2022, the United States Trustee (the “UST”) filed an objection to the Creditor Matrix Motion (D.I. 45). (D.I. 200) A lot of the arguments in the UST’s objection are covered above, and for the sake of brevity (a laughable goal, we acknowledge), we’ll try to keep this section brief and delve deeply only into novel areas of argument.

§107 and Public Right of Access

The motion’s arguments begin with a discussion of §107 and the public’s right of access. The research here is excellent, but likely only to be of interest to fellow bankruptcy law nerds, and not to the general public. The core question with respect to §107 is whether the Debtors have carried their burden to show why redaction is proper. The UST argues that the Debtors have failed to deliver actual evidence, beyond assertions of the Debtors and their counsel, that the customer information is of commercial importance and warrants sealing. (¶ 53) Furthermore, the clarify with legal citations that just because information is “confidential” does not mean it is “commercial.” (¶ 53)

The question we have here is exactly what sort of evidence would exist that the Debtors could show? A diagram showing how customer names are used in the account creation process? This seems pretty…obvious. If a business exists to service customers, the identities of those customers would be instrumental in rendering that service. Furthermore, where part of the business service is providing anonymity in financial transactions, the preservation of that anonymity is, again, a big part of that service. This just doesn’t seem like the sort of fact that the existence of which can actually be proven with evidence.

The Privacy Policy

The UST also takes the interesting step of looking into the Debtors’ privacy policy, as contained on their website. Whereas the Debtors have contended that customer information is secret and confidential, the UST argues that, because the Debtors’ privacy policy allows for the sharing of such information, it should not be considered as secret or confidential. (¶ 59) This is a comically simplistic understanding of the notion of information sharing. Companies often share highly confidential information with others under non-disclosure or similar agreements (“NDAs”). For instance, if Raytheon shares highly confidential information on the latest missile it’s designing with a company charged with producing the guidance system for said missile, it would be ridiculous, ipso facto, to think that such information information about the missile is no longer secret or confidential. It would take a showing here that the Debtors have previously shared customer information without confidentiality protections for the same in order for the UST’s argument to work. Given the state of affairs at FTX, we’re not prepared to say that that never happened; in fact, it may well could have. But that needs to be demonstrated, as it would be a fact whose existence can be proven with evidence.

The UST goes on to state that “…the [Debtors’] Privacy Policy allows the Debtors to share privacy information if legally required to do so, as they are here, under the statutory requirements of the Bankruptcy Code.” (¶ 59) Okay, so what? The Debtors are allowed to share it, so sharing it therefore would not be a violation of their own Privacy Policy. This would be useful in determining, inter alia, whether the Debtors would have liability to individuals whose information was shared, likely in the context of actions by such individuals claiming breach of the Policy. But that’s not the question here. The risk of being sued under such claims is not a significant basis for the Debtors’ requested relief.

Celsius Redux

The UST makes a decent argument that, if the Court here were to go the Celsius route of requiring disclosure of names, but not addresses or e-mail addresses, how would this create an undue risk of identity theft or other unlawful injury. (¶ 64) Here, though, we need to look more broadly at the notion of identity-related injury, in light of the realities of the crypto space. If the disclosure of names and amounts here could lead to the de-anonymization of crypto wallets vis-à-vis publicly available information on the blockchain, one might consider that to be a form of unlawful injury.

More GDPR Fun

However, the UST’s motion does make excellent points with respect to the GDPR issues at stake, noting that “the Debtors have put forth no proof whatsoever, let alone the plausible evidence required, that their applicable Supervisory Authority or the UK Commissioner, would unduly pursue enforcement action and issue penalties against them for obeying both U.S. law and a specific disclosure order of this Court” (¶ 74) and “in addition, it appears that the Debtors do not even know which of their customers and creditors are citizens of the UK or an EU member country, because in many instances, the Debtors do not have street addresses for such customers and creditors. Even for those customers and creditors for whom the Debtors do have addresses, an address alone does not establish citizenship.” (¶ 75) So, even if Judge Dorsey were to grant the novel relief of allowing the Debtors to make different disclosures with respect to customers based on the applicability of the GDPR, the Debtors, it seems, would not be able to make much use of it.

Furthermore, the UST’s objection does highlight the fact that the GDPR contains an exception for the transfers of information if “the transfer is necessary for the establishment, exercise or defence of legal claims. GDPR, Art. 49(1)(e).” (¶ 76) To summarize: 1) the GDPR allows for the transfer of information pursuant to a legitimate legal claim; 2) the Debtors’ chapter 11 case creates, pursuant to the operation of the Bankruptcy Code, such a legal claim; 3) the Debtors could have taken the step of asking the European regulators for permission to transfer customer information otherwise protected from such transfer under the GDPR, but did not do so, or if they did, have not produced any evidence of having done so; and 4) the Debtors are seeking to avoid making such a transfer by stating that the GDPR prevents it, when the GDPR actually provides a permissible means for them to do so.

However, there is a problem here. In all of the language used by the GDPR and, as it follows, quoted by the UST, a “transfer” of the information might be permissible. “Transfer,” however, is not the same as “public disclosure,” and the UST’s motion fails to address this point. To us, a “transfer” might be the sending of electronic records of customer information protected by the GDPR from a European datacenter of the Debtors’ to a US datacenter of the Debtors’, and further on to a US datacenter of the Court’s and/or the Claims Agent’s. That conduct might otherwise be impermissible under the GDPR, but there would here be a safe harbor for the actual transmission or movement (the, “transfer”) of the protected data. The GDPR itself does not define the word “transfer.” And in no rational sense can one simply equate the terms “transfer” and “public disclosure,” especially not in the context of a data privacy regulation.

Our Overall Thoughts

First, *big sigh.* There has been a lot of back-and forth on the issues presented, both in the pleadings and also in the general public discourse. We cover the public discourse and broader implications in a separate section of The FTX Files, below. Here, we’re just concerned with how this issue will be adjudicated in the instant case.

Celsius and Cred

Ultimately, the motions practice on the issue of redactions in the disclosure of creditor identities leaves us feeling that this is a question for which there are no good answers. There’s decent arguments on both sides, but neither side, to us, fully carries the day. Judge Glenn’s ruling in the Celsius case, as well as Judge Dorsey’s in Cred, tries to make the best of a set of not-so-great outcomes. This should, at the very least, serve to indicate how vital and incredibly nuanced this issue is; it is entirely, as they say, “something on which two smart guys can disagree.”

As a preliminary matter, we think it’s vital to remember that we’re in a chapter 11 context in this case, and in Cred. This is a reorganization, not a liquidation, and so some thought has to be given to what the Debtors’ business will look like in the future. For a number of reasons unrelated to the disclosure or redaction of customer-creditor identities, things don’t look so hot. But the disclosure / redaction issue does pile on to the problem, and with serious heft.

GDPR Again…

The GDPR concerns alone are troubling. Compliance is typically easy enough, and the penalties are generally scary enough, such that businesses tend to care deeply about getting it right with respect to the GDPR. But now, as if trying to reform the FTX businesses wasn’t enough to worry about, the potential for a court-mandated violation of law looms on the horizon. Compliance failures are, in part, how the Debtors got here today. It is ironic, then, that the corrective path forward should nonetheless require further compliance failures.

We’re not entirely clear on what discretion is afforded to the European regulators with respect to GDPR enforcement, such that they might have the ability to negotiate some sort of relief for the Debtors on the disclosure matter in return for having their concerns heard and mitigated. Even if such discretion were permissible, we have no visibility into whether such regulators would even be amenable. And it’s unlikely, in our opinion, that they would note an appearance and file a pleading making their wishes and intentions known to the Court. So, in the absence of such a measure, the only reasonable assumption is that enforcement measures are a very real possibility, if not an outright certainty. This case, unfortunately, is not one that’s going to simply slip through the cracks.

Safety vs. Access

Another concerning area is whether disclosures here might threaten the safety of customers’ other crypto assets via, inter alia, the use of information disclosed pursuant to a bankruptcy proceeding being used to de-anonymize customers’ crypto wallets. As this is more of an overarching matter not exclusively applicable to the FTX bankruptcy case, we will consider it in a separate section further below in The FTX Files.

And, of course, there’s the issue of the public’s right of access. In considering all of the above, we don’t mean to downplay the vital role this plays in the legitimacy of the legal processes of the United States.


Ultimately, we fail to see how anything in the pleadings creates significant daylight between the facts and concerns here and those in the Cred case, such that Judge Dorsey would rule differently than he did in Cred.


The Creditor List Motion (D.I. 9) and the Creditor Matrix Motion (D.I. 45) are scheduled to be heard at the second day hearing on 11 January 2023, pursuant to the scheduling discussion which took place at the 14 December Hearing. (D.I. 227) We will cover that hearing in a separate section of The FTX Files, below.

The Indemnification And Exculpation Sealing Issue

Mystery Abounds

On 22 November 2022, the Debtors filed, under seal, a motion to authorize titled “Motion for Entry of Interim and Final Orders (A) Authorizing the Debtors, in their Sole Discretion, to Provide Indemnification and Exculpation to Certain Individuals, (B) Authorizing Certain Actions Pursuant to Section 363 of the Bankruptcy Code, and (C) Granting Certain Related Relief.” (D.I. 94) The “Indemnification and Exculpation Motion,” as it’s referred to, is accompanied by a motion for the entry of an order authorizing the filing of the aforementioned motion under seal. (D.I. 95)

The accompanying motion contains 3 paragraphs with information as to why the Indemnification and Exculpation Motion should be kept under seal. We quote them here in their entirety:

“In light of the risk of cyber-attacks and other malicious activity, the Indemnification and Exculpation Motion seeks authorization on an emergency basis to provide indemnification and exculpation of certain individuals for certain authorized actions described in the Indemnification and Exculpation Motion.

“The Indemnification and Exculpation Motion details certain actions that the Debtors and certain individuals have taken and continue to take in connection with valuable assets that represent a significant share of the Debtors’ estates as well as descriptions of the locations of these assets.

“The Debtors seek to file the Indemnification and Exculpation Motion under seal to protect confidential commercial information, the public disclosure of which may put certain of the Debtors’ assets at further risk of cyber-attacks or other malicious activity.” (¶¶ 3-5)

The motion does mention supporting detail being provided in the Ray Declaration (D.I. 24), as discussed above, which we believe are the “certain defensive measures” discussed therein. Recall, that piece of information was provided without further context, and the context here is more, if still rather light.

It seems as though, and this is us just guessing, that the parties to be indemnified and exculpated are current employees of FTX who are required to take certain actions in furtherance of the implementation of the contemplated defensive cybersecurity measures. As discussed in the Ray Declaration, though we’re still not entirely clear on how, the contemplated defensive measures may wind up putting the assets at risk if the Debtors seek to access those assets themselves. Or…something?

In any case, interim relief on this motion was granted by the Court at the first day hearing. Nevertheless, we’re still curious.

We plan to do further research around the cybersecurity topics at issue here and discuss our findings in a forthcoming section of The FTX Files. For now, though, this seems like some people who are necessary to the continued defense of FTX’s assets don’t want to be on the hook if things go wrong.

There’s a core dichotomy here: creditors generally want full access to information, but are also seeking to maximize their respective recoveries out of the Debtors’ estate. In this situation, the two are diametrically opposed, it seems, in a crypto-bankruptcy version of Schrödinger’s Cat. An interested party may contemplate filing a motion to determine the eigenvalue of the assets.

Mystery No More…Soon

At the 14 December Hearing, both the UST and the Debtors’ represented that the Debtors no longer require that the Indemnification and Exculpation Motion (D.I. 94) be filed under seal. (D.I. 227

Unsealed Motion

The unsealed Indemnification and Exculpation Motion (D.I. 94) lays out 2 classifications of assets of the Debtors that are, or at least were, at the time of the filing of the motion, at risk of loss (“At-Risk Assets”): i) crypto assets of the Debtors custodied on third-party exchanges or in unrelated hot wallets (“At-Risk Crypto Assets); and ii) cash in US bank accounts, non-US bank accounts, or on third-party exchanges (“At-Risk Cash Assets”). Within the category of At-Risk Cash Assets, assets may be “restricted” or “unrestricted.”

Because of market turmoil and other factors, the Debtors want to exit all positions on third-party exchanges and move the At-Risk Crypto Assets into cold wallets, (¶ 6) and, as of the petition date, have been doing so to cold wallets maintained with BitGo Inc. (“BitGo”). (¶ 7)

The transfer of At-Risk Crypto Assets is itself risky, as bad actors may redirect transfers or seize assets in violation of the automatic stay, and there’s the possibility of inadvertent loss due to mistaken transfer. (¶ 8) Transferring crypto assets requires access to private keys, which bad actors may either have access to, or obtain through unauthorized means (e.g., via cyberattack). (¶ 9) Because transfers occur in series and not all at once, and because those possessing private keys will receive notifications of transfers, the commencement of any transfer comes with the risk of notifying a potential bad actor of the transfer, and thus giving the bad actor the opportunity to block, redirect or otherwise obstruct subsequent transfers pertinent to the private key which the bad actor possesses. (¶ 9) In our view, the Debtors lay out a great primer on the risks and potential pitfalls related to the transfer of crypto assets in their motion, and it’s worth a read for those less familiar with the mechanics of crypto assets. There’s also a discussion of what we might already be familiar with regarding conventional bank account transfers of cash held in banks worldwide, and the risks related thereto.

To make a long story short, personnel of the Debtors will need to take certain actions with respect to moving the Debtors’ At-Risk Assets into cold wallets (with respect to crypto assets) or secure bank / brokerage accounts (with respect to cash / securities assets). There’s a risk that these transfers may go awry. Debtors, in their motion, request relief from the Court to indemnify and exculpate those personnel of the Debtors who act to secure the Debtors’ At-Risk Assets.

To us, there isn’t anything particularly controversial around the indemnification and exculpation of Debtors’ personnel. What’s interesting here is what’s also being discussed in the crypto / financial regulatory community generally: crypto architecture is risky.

The Chapter 15 Venue & Recognition Issues

The Venue Transfer Motion

On 17 November 2022, the Debtors filed an emergency motion pursuant to Bankruptcy Rule 1014(b) to transfer the chapter 15 proceedings for FTX Digital Markets, Ltd. to the U.S. Bankruptcy Court for the District of Delaware (the “Venue Transfer Motion”). (D.I. 22) To put this into context, we need to rewind the tape a bit.

How Did We Get Here?

On 10 November 2022, the Securities Commission of The Bahamas (“BSC”) announced that it had taken action to: 1) freeze the assets of FTX Digital Markets Ltd. (“FTX DM”) and related parties; 2) suspend the registration of FTX DM; and 3) apply to the Supreme Court of The Bahamas (“SCB”) for the appointment of a provisional liquidator of FTX DM.

FTX DM is an entity organized under the laws of The Bahamas and is a non-Debtor in the chapter 11 case being administered in Delaware. As indicated in the Ray Declaration, FTX DM falls within the “Dotcom Silo” of FTX entities, and was used to provide services to FTX Trading, Ltd. as well as employ several of FTX’s employees in The Bahamas. (Ray Declaration, D.I. 24)

The SCB appointed Brian Simms, KC, as a court-supervised provisional liquidator of FTX DM. On 14 November 2022, the SCB further appointed Kevin Cambridge and Peter Greaves of the audit firm PwC as joint provisional liquidators (collectively, with Simms, the “JPLs”) of FTX DM.

In the Venue Transfer Motion, the Debtors state that, on 13 November 2022, they sent a letter to Simms and the BSC which, inter alia, made them aware of the pendency of FTX’s chapter 11 case in the U.S. Bankruptcy Court for the District of Delaware. (¶ 2) Furthermore, the Debtors state that on 15 November 2022, US-based counsel for the JPLs spoke with the Debtors via teleconference, and were briefed on the Debtors’ ongoing work and plans with respect to the Debtors’ ongoing chapter 11 case in Delaware. (¶ 2) The Debtors state that, on such teleconference call, “no mention was made of the JPLs’ intention to file [a] Chapter 15 Case,” and “accordingly, there was no opportunity to discuss venue.” (¶ 2)

On 15 November 2022, the JPLs filed, in the U.S. Bankruptcy Court for the Southern District of New York, a chapter 15 petition for recognition of a foreign proceeding, relating to the liquidation proceedings for FTX DM being conducted by the JPLs in The Bahamas (such S.D.N.Y. proceeding being, hereinafter, the “Chapter 15 Case”). (In re FTX Digital Markets, Ltd. (in Provisional Liquidation), Case No. 22-11516-MEW) The case was assigned to Judge Michael E. Wiles.

Chapter 15: A Brief Explanation

Chapter 15 was added to the U.S. Bankruptcy Code in the 2005 amendments made pursuant to the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”). The purpose of chapter 15 is to make the cross-border (i.e., international) bankruptcy process easier by, e.g., facilitating cooperation between a U.S. bankruptcy court and one or more foreign competent authorities (such as a foreign bankruptcy court). Chapter 15 cases are typically ancillary proceedings, with a foreign proceeding being the primary. Cases under chapter 15 are commenced by a “foreign representative” filing a petition for recognition of a “foreign proceeding” pursuant to § 1504 of the Code. Once a foreign proceeding is recognized by a U.S. bankruptcy court, a foreign representative may seek additional relief from such bankruptcy court (§ 1509 et seq.) , and foreign creditors are likewise able to participate in the U.S. bankruptcy case (§ 1513 et seq.).

Violations of the Stay

Parts of this motion are fully worth a read even for those thoroughly uninterested in bankruptcy law. Pages 4 and 5 contain screenshots of the Twitter conversation between FTX’s former CEO, Sam Bankman-Fried (“SBF”), and a journalist from Vox. (pp. 4-5) Debtors furthermore state that SBF and Gary Wang (an FTX co-founder) were making post-petition transfers of assets into the control of the Bahamian regulators, a violation of the automatic stay in the Debtors’ chapter 11 case. Paragraph 7 of the Venue Transfer Motion best summarizes the thrust of the motion, and we here quote it in its entirety:

The Debtors have credible evidence that the Bahamian government is responsible for directing unauthorized access to the Debtors’ systems for the purpose of obtaining digital assets of the Debtors—that took place after the commencement of these cases. The appointment of the JPLs and recognition of the Chapter 15 Case are thus in serious question. It appears that the automatic stay has been flaunted, by a government actor no less. This is no time to be arguing over venue.” (¶ 7)

No, it certainly is not.

Agreed Order To Transfer

In light of the Debtors’ motion, the JPLs consented to the transfer of venue for the Chapter 15 Case to the U.S. Bankruptcy Court for the District of Delaware. The Court entered an Order to this effect on 22 November 2022. (D.I. 131)

The BSC Venue Transfer Press Release

The BSC issued a press release on the topic of the Venue Transfer Motion a day later, on 23 November 2022. In it, they admit to seeking, on 12 November 2022, an additional order from the SCB for authority under the DARE Act (a law of The Bahamas covering, inter alia, digital assets and exchanges) “to transfer all digital assets of FTX into digital wallets under the exclusive control of the [BSC] for the benefit of clients and creditors of [FTX DM].” Curiously, they never discuss whether these transfers were lawful under the automatic stay imposed by §362 of the Code in light of the Debtors’ chapter 11 petition filed the day prior. Furthermore, the only company under jurisdiction of the JPLs is FTX DM. FTX DM is not the parent entity of any other FTX entity. (See, e.g., Ray Declaration, D.I. 24, p. 30) We fail to understand in what circumstance the creditors of FTX DM, in a liquidation of FTX DM only, would have recourse to “all digital assets of FTX,” which the BSC sought to take control of.

The BSC continues, “It is unfortunate that in Chapter 11 filings, the new CEO of FTX Trading Ltd. misrepresented this timely action through the intemperate and inaccurate allegations lodged in the Transfer Motion.” A few corrections:

1.  Ray is not just the new CEO of FTX Trading Ltd., but of all of the Debtors. While FTX DM is a non-debtor in the chapter 11 case, and furthermore, while we are not certain of how, if at all, Ray’s appointment affects management roles at non-debtor subsidiaries within the 4 identified Silos of FTX, Ray is nevertheless the CEO of FTX DM’s parent entity, FTX Trading Ltd. (See, e.g., Ray Declaration, D.I. 24, ¶ 1 and p. 30)

2. We take issue with the BSC’s use of the word “timely” here. The automatic stay went into place on 11 November 2022. The BSC sought the additional court order under the DARE Act from the SCB on 12 November 2022. The order covered, inter alia, assets of the Debtors’ estate. We fail to see how the BSC’s actions can be characterized as “timely.” 

And the BSC further continues, “It is also concerning that the Chapter 11 debtors chose to rely on the statements of individuals they have (in other filings) characterized as unreliable sources of information and potentially ‘seriously compromised.'” The statements at issue were that the Bahamian authorities were instructing SBF and Gary Wang to transfer FTX assets into wallets under the control of the Bahamian authorities. Not only were these statements true, but the BSC in this very same press release confirmed that the statements were true. This is absurd.


As discussed in the 14 December Hearing, the chapter 15 case filed by the JPLs in the Southern District of New York, and which has been transferred to the District of Delaware as discussed above, has not yet received formal recognition by the Court. (D.I. 227)

At the hearing on 16 December, there was some confusion as to whether the Recognition Hearing was or was not scheduled for 13 January. Turns out, it has not been scheduled, and Debtors stated that they would need significant discovery from the JPLs and other parties prior to a hearing. JPLs counsel offered to start discovery now, stating that these delays prejudice their client.

Our take: delaying recognition works in favor of the Debtors, but wanting significant discovery here isn’t entirely unfair, or an unfair use of the process, either.

We will continue to monitor developments in the recognition proceeding and cover them here as they arise.

The Examiner Issue

UST Examiner Motion
What’s an Examiner, anyway?

On 1 December 2022, the United States Trustee filed a motion requesting that the Court enter an order directing the appointment of an examiner (the “UST Examiner Motion”). (D.I. 176) For non-bankruptcy professionals, the notion of an “examiner” may be a foreign concept. In short, an examiner may be appointed by the Court to conduct its own investigation into the circumstances of the debtor, in parallel to any investigations being conducted by the debtor itself. Examiner reports are matters of public record, filed with the Court typically periodically in the course of a case. We note that examiners are not common in chapter 11 cases, but have been appointed in several large and complex chapter 11 cases in the past. Further information on an examiner and its role may be found here.

The UST Motion

The UST notes that examiners have been appointed in large and complex chapter 11 cases, such as those of Lehman Brothers, Washington Mutual, and New Century Financial. (p. 2) The motion reads,

“An examiner could—and should—investigate the substantial and serious allegations of fraud, dishonesty, incompetence, misconduct and mismanagement by the Debtors, the circumstances surrounding the Debtors’ collapse, the apparent conversion of exchange customers’ property, and whether colorable claims and causes of action exist to remedy losses.” (p. 2)

The UST makes a strong argument that the appointment of an examiner is mandatory under Code §1104(c)(2), because the debts of the Debtor exceed the statutory threshold as set forth therein. The strongest fact for the UST, as noted in their motion, is that FTX Trading has a massive and irregular claim against Alameda, and that, given that the two are both Debtors in these jointly administered cases, an outside investigation from an examiner is necessary.

The UST continues,

“A section 1104 examination is also preferable to an internal investigation under the facts of these cases because the findings and conclusions of the examination will be public and transparent, which is especially important here because of the wider implications that FTX’s collapse may have for the crypto industry.” (¶ 42)

While not being sure what duties the UST has to the crypto industry at large, we can’t disagree with the premise. Given the number of crypto bankruptcies in 2022, and ongoing questions about, inter alia, Binance, it’s our thought that the public would benefit from knowing more about what exactly went on inside FTX.

Our Thoughts

As we’re very much interested in the FTX case, and in its broader implications on the crypto industry as a whole, we’d like to see an examiner appointed. However, the public’s desire for insight and business intelligence should not come before the rights of creditors to receive recoveries. At the time of this writing, it’s still unclear whether the Debtors will fight the appointment of an examiner. Our gut says that they likely will.

To us, there’s two main things to think about here:

1.  Is there a reasonable argument that the appointment of an examiner would hinder the Debtors’ efforts to recover assets for the benefit of creditors?

2.  Would the appointment of an examiner to conduct internal investigations relieve the Debtors of some of their workload, as the UST suggests in its motion (p.3), in conducting all appropriate internal investigations and asset traces?

State of Wisconsin Joinder to UST Examiner Motion

On 21 December 2022, the Attorney General of Wisconsin filed a joinder to the UST Examiner Motion. (D.I. 263)

The JPL Data Access Issue

The JPL Stay Relief Motion

On 9 December 2022, the JPLs filed an emergency motion seeking relief from the automatic stay and to compel the turnover of electronic records (the “JPL Stay Relief Motion”). (D.I. 197) The JPLs, appointed by the Supreme Court of The Bahamas, have a court-mandated duty to wind up the affairs of FTX DM (alternatively referred to as “FTX Digital”). The JPLs state that they require access to certain electronic data of FTX Digital that is currently under the control of and in the possession of the Debtors, and that, given that it may be considered property of the estate, relief from the stay is required in order for FTX Digital to secure it. (¶¶ 1-3)

Just Read The Motion

The motion is very readable, even for non-lawyers. If for only just the Background section (and more specifically, paragraphs 13 through 19), we’d really encourage those interested to read this motion. For those nevertheless too busy to read 7 measly paragraphs, here’s what the JPL Stay Relief Motion would be if it were filed as a tweet: “hey guys, we have to liquidate FTX Digital and we need our data to do that. we used to have access, but the day after the debtors filed chapter 11, they cut off our access. please give us our data, k thx.”

Relief Requested

Specifically, the JPLs want access to 5 categories of information: 1) international trading platform data; 2) e-mail records for FTX Digital employees; 3) Slack chat records for FTX Digital employees; 4) documents stored on Google Docs; and 5) accounting system (QuickBooks) data. (¶ 18)

The Greaves Supporting Declaration

On  9 December 2022, Peter Greaves, one of the JPLs of FTX DM, filed a declaration in support of the JPL Stay Relief Motion. (D.I. 198) Like with the motion it supports, the declaration is highly readable to a lay audience and is worth a read.

Greaves sets forth in more precise terms what information the JPLs seek to acquire from the Debtors / have access provided by the Debtors (the “Recorded Information”).

As a matter of clarification from us, it’s common, in our experience, for related entities to share IT resources licensed by a single entity. For instance, Company A might have subsidiaries B and C, take out software licenses for the group of companies, and provide access to subsidiaries B and C through inter-company or service-level agreements (“SLAs”).

Here, Greaves indicates that FTX DM relied on IT resources provided through “the website and its underlying technology platform (collectively known as the ‘International Platform’)” (¶ 8). This is, in our opinion, a weird way of phrasing it given that “the website” is not a business entity in and of itself. Can the JPLs not identify from which FTX entity was FTX DM provided access to the Recorded Information? Then again, given what we’ve been led to believe generally about the state of internal controls and administrative matters at the pre-petition Debtors, it isn’t hard to believe that no SLAs exist.

Nevertheless, it seems the Recorded Information centers around two core systems: 1) an Amazon Web Services (“AWS”) cloud account used to run the International Platform’s tech stack; and 2) a Google Cloud Portal (“GCP”) account which was used to store backups of key records from the AWS implementation. (¶ 8)

Access to these systems by FTX DM was apparently cut off on 12 November 2022. (¶ 10) Greaves continues, “While I am not sure who abruptly cut off access to the Recorded Information or why access has not been restored, I understand that the U.S. Debtors have the ability to restore FTX Digital’s access to the information promptly.” (¶ 10) Gee, we don’t know, maybe access being cut off had to do with violations of the automatic stay to which the BSC has publicly admitted? Could those things perhaps be related?

Our Take

We understand that the JPLs have a job to do, but doing that job cannot come at the expense of compliance with US law, including, e.g., §362 of the Code.

The Debtors’ Objection To The JPL Stay Relief Motion

On 30 December 2022, the Debtors filed an objection to the JPL Stay Relief Motion (here, the “Debtors’ Objection”). (D.I. 335) The highlights are as follows:

  • The JPL Stay Relief Motion is premature because the Court has recognized neither the Chapter 15 proceeding, nor the JPLs themselves as foreign representatives. (¶ 2)
  • The JPLs fail to demonstrate that the materials to which the JPLs seek access are the property of FTX DM. (¶ 3)
  • FTX DM was not a significant entity within the Debtors’ corporate structure, and certainly not at its center. (¶ 4)
  • Debtors will object to recognition, at least in part because “those purporting to be foreign representatives who have, without explanation, either violated the automatic stay or aided and abetted violations of the automatic stay by others, are not entitled to recognition.” (¶ 5)
  • The BSC issued a press release in which it detailed its seizing of assets which the Debtors view as belonging to the Debtors, and which the Debtors state demonstrates an “end run” around the chapter 11 proceedings.
The JPL Motion To Shorten

On 9 December 2022, the JPLs filed a motion to shorten the notice and objection periods with respect to the JPL Stay Relief Motion (D.I. 197) (referred to herein as the “JPL Motion To Shorten,” though there may be other motions seeking to shorten notice and objection periods elsewhere in the case, for the avoidance of confusion of reference). (D.I. 199)

In short, this is a motion to have the JPL Stay Relief Motion heard on a “fast-track” basis. The reason the JPLs give has been discussed above, namely that there is an open risk of data loss.

This motion was heard at the 14 December Hearing, which we discuss below.

The Debtors’ Objection To The JPL Motion To Shorten

On 12 December 2022, the Debtors filed an Objection to the JPL Stay Relief Motion (the “Objection”). (D.I. 203) Without further ado, let the fireworks…commence!

The Debtors’ Position

The first paragraph succinctly summarizes the Debtors’ position on this matter, and we here quote it in its entirety:

“The relief sought by the Joint Provisional Liquidators (‘JPLs’), though couched in ordinary terms, is actually quite extraordinary. It is not a request for information; rather, it is a request for access—full and total access to all of Debtors’ cloud-based systems. It is a request for live, dynamic access that would be provided immediately to the government of The Bahamas and to Messrs. Samuel Bankman-Fried and Gary Wang, who are located in The Bahamas and working closely with Bahamian officials. The Debtors simply cannot allow this to occur.” (¶ 1)

And the Debtors continue,

“The JPLs have identified no exigency that would justify the Motion to Shorten and, in any event, the substantive relief is not warranted and presents massive and unjustifiable security risks to the Debtors, their assets, their customers and creditors. It is also inconsistent with the Debtors’ cooperation with the many investigations by U.S. law enforcement and regulatory authorities now underway into the failure of the Debtors.” (¶ 2)

Already, this fight has been worth the price of admission.

Risk to Assets and Information

The Debtors argue that there isn’t a unique risk of any of the Recorded Information the JPLs seek being deleted or destroyed that only the JPLs would be able to prevent, but rather, that: 1) the Debtors are doing all they can to ensure that that isn’t the case; and 2) that the JPLs couldn’t do anything  more than is already being done by the Debtors with respect to the same. (¶ 3) The Debtors state that FTX DM’s access to the Recorded Information was stopped in response to “substantial and unauthorized access” by SBF and Gary Wang at the direction of the JPLs and the BSC. (¶ 3)

Attempts To Cooperate

The Debtors further state that while they’ve tried to reach out to the Prime Minister and Attorney General of The Bahamas, as well as to the BSC, they’ve been met with “a complete refusal to provide any information whatsoever, including an accounting of diverted assets.” (¶ 3) The Debtors put a fine edge on their point: “The JPLs know that this stonewalling will continue. They admit as much in their papers.” (¶ 3) With respect to the latter, the Debtors quote the JPL Stay Relief Motion wherein the JPLs represent that any information-sharing protocol would be subject to the authorization of the SCB, and moreover, that it is not certain whether the SCB will authorize the cooperation. (¶ 3)

Preferential Treatment of Bahamian Customers

The Debtors have brought with them what is, in our minds, a pretty good pile of supporting evidence. On the matter of SBF’s intent to provide FTX’s Bahamian customers with unequal, preferential treatment vis-à-vis FTX’s other customer-creditors, Debtors produce an e-mail sent 2 days prior to the petition date from SBF to the Bahamian Attorney General in which he states that he’s segregated funds for Bahamian customers and would allow them to make full withdrawals. (¶ 9, Ex. A) Furthermore, the Debtors state that between 10:30 AM on 10 November 2022 to 12:00 PM on 11 November 2022, SBF did open withdrawals on the exchange on a limited basis, during which time approximately $100 million in cryptocurrency was withdrawn by roughly 1,500 individuals who were purportedly Bahamian customers of FTX. (¶ 9) “No other customers of FTX entities were given such an opportunity for preferential treatment,” the Debtors state. (¶ 10)

If you’ve ever wondered what a preferential transfer is in the context of a bankruptcy, it is this. Literally this. We anticipate that this will become a literal textbook example someday. Side note: prosecuting preferences against international transferees may prove difficult, but that is an issue for later in this case and we will cover it, in detail, at the relevant time.

The Recorded Information: Ownership and Location

The Debtors state that Alameda, a debtor entity in this case, contract for, pays for and has the right to control access to the AWS and GCP services provided to FTX, including FTX DM. (¶ 13) Furthermore, these services are provided using servers located within the United States. (¶ 13)

Unauthorized Access to Property of the Estate

Paragraphs 14 and 15 of the Debtors’ Objection are revealing, and we quote them here in their entirety:

“On the evening of November 11, 2022, while Debtors were in the process of securing these assets and others, it became clear that the systems that control Debtors’ digital wallets were being accessed by one or more unidentified and unauthorized actors. The Debtors and their advisors worked through the night into the early morning hours of November 12, 2022 to block such access and move digital assets to secure cold wallets. Also on November 12, 2022, the Debtors observed the minting of new FTT tokens.” (¶ 14)

“During this period—and subsequently—information emerged that Debtors’ systems and assets were accessed from at least two sources. (See Ray First Day Declaration ¶ 75.) One source continues to be under investigation. The second source, based on evidence collected by Debtors, shows without doubt that the Commission—after the filing and public announcement of the Chapter 11 Cases instructed Messrs. Bankman-Fried and Wang to mint a substantial amount of new tokens and transfer hundreds of millions of dollars’ worth of those new tokens and other digital assets to cold storage under the control of the Commission. The Debtors’ investigation of this unauthorized access is ongoing and is yielding new information by the day.” (¶ 15)

Jaw-dropping. But wait, there’s more:

Apparently, the Debtors were not made aware of the existence of the SCB’s sealed order authorizing the JPLs to seize FTX assets until 23 November 2022, and via the BSC’s press release (which we’ve discussed above), of all ways. (¶ 16, 17) In our view, this doesn’t exactly point to open and clear communication by the JPLs, the BSC, the SCB, or any of the other Bahamian parties in interest. Furthermore, the Debtors state that “…despite repeated requests, Debtors have not received from the JPLs any detail as to what assets the Commission seized, how they were transferred, or why they reference FTX assets as opposed to FTX DM assets.” (¶ 17) Bingo. Absent some shocking new evidence we don’t think is coming, this paints a pretty clear picture of the actions of the JPLs and the Bahamian authorities: an unauthorized asset grab.

What We’ve Got Here Is A Failure To Communicate

The next section of the Debtors’ Objection is an account, in painstaking detail, of the state of communications between the JPLs and the Debtors. To make a long story short, the JPLs cite the exigency of the matters at hand as the reason why their request to have their motion heard on an expedited basis is proper. The Debtors argue that, if circumstances were so exigent for the JPLs, then why wouldn’t the JPLs communicate with the Debtors by, e.g., responding to their communications and requests for meetings, protocols for information-sharing, etc. For example, on 7 December 2022, Bahamian counsel for the BSC sent Bahamian counsel for the Debtors a letter which stated that the BSC had no comment on the Debtors’ suggestion of creating communications protocols between the Debtors and the JPLs. (¶ 27) Furthermore, in response to the JPLs’ contention that they have made numerous attempts to access the subject information by, inter alia, instructing employees to attempt to gain access (JPL Stay Relief Motion ¶ 15), the Debtors state,

“In fact, the Debtors have received numerous requests from Mr. Bankman-Fried and others for passwords and access to the Debtors’ systems. Each one of these requests has been rejected. These requests for access to the Debtors’ systems cannot seriously be construed as an attempt by the JPLs to resolve this issue.” (¶ 34)

On the point of the JPLs’ contention that there is a risk of the data to which they require access being lost or permanently deleted, the Debtors point out that the JPLs nevertheless acknowledge in their motion that the Debtors have made a clone of the applicable database in which such information resides. (¶ 36) As the Debtors state, “The JPLs fail to explain, nor could they, how information could be ‘purged and lost forever,’ when Debtors have already taken steps to preserve the information.” (¶ 36) The Debtors continue,

“Similarly, the JPLs do not explain how access would help them to ‘protect assets at risk of dissipation.’ These explanations are pretexts for the JPLs’ true goal, to get access to the dynamic databases. Indeed, if the JPLs had any serious concern about information being purged through automatic deletion, they would have identified the repositories as to which they are concerned and the date they believe such information would be purged. They have not.” (¶ 36)

No, but tell us how you really feel, Debtors.

To us, the Debtors attempt to paint the picture of the JPLs motion as rushed nonsense, and, again to us, they succeed in doing so. We’ll see how this plays out at the hearing on 14 December, attendance details for which we’ve posted in the relevant section of The FTX Files, below.

Exhibiting Communication

On 12 December 2022, in support of the Debtors’ Objection to the JPL Stay Relief Motion, the Debtors filed a supporting declaration by their lead counsel in this case, James Bromley (here, the “Bromley Declaration,” though we recognize that there may be other similarly referenced Bromley declarations mentioned elsewhere in The FTX Files). (D.I. 205)

The Bromley Declaration puts into the record a series of exhibits referenced in the Debtors’ Objection to the JPL Stay Relief Motion (here, the “Exhibits”). The Declaration itself is nothing more, but the Exhibits are…well, we’re running out of synonyms for “shocking.” We highly, highly encourage all those interested in the FTX saga to read these Exhibits. Nevertheless, we’ll also provide brief summaries, and our thoughts, below.

Exhibit A – E-mail from SBF to the Attorney General of The Bahamas, dated 9 November 2022.

The e-mail references a certain “Joe (cc’ed).” The CC-ed party is SBF’s father, Stanford Law professor Joseph Bankman, who supposedly played only a minor role at the company.

The e-mail contains what was apparently SBF’s plan to segregate the funds of Bahamian customers and allow such customers to withdraw funds.

Exhibit B –Press release by the BSC, dated 23 November 2022.

We’ve covered this press release in the Venue Transfer Motion section of The FTX Files, above.

Exhibit C – Letter from Debtors’ counsel to BSC and JPL Simms, dated 13 November 2022.

The letter apprises the Bahamian parties of the effect of the automatic stay under §362 of the Code.

Exhibit D – Letter from Debtors’ CEO (Ray) to the Prime Minister of The Bahamas and the Attorney General of The Bahamas, dated 27 November 2022.

The letter requests a line of communication between Ray and the Bahamian authorities regarding the latter’s role in the US chapter 11 proceedings.

Exhibit E – Press release by the Attorney General of The Bahamas, dated 27 November 2022.

The press release contains a national address (i.e., a speech) given by the Attorney General of The Bahamas to the general public regarding FTX. The speech is worth a read. In it, among other things, are allegations that the prospect of multi-million dollar legal fees are driving strategy decisions with respect to the chapter 11 case, assertions that the Bahamian DARE Act authorizes the seizure of FTX assets for the benefit of FTX DM customers and creditors, and a continued invitation for digital asset businesses to operate out of the Bahamas because of its “complete and effective regulatory framework.”

Exhibit F – Letter from Debtors’ CEO (Ray) to the Prime Minister of The Bahamas and the Attorney General of The Bahamas, dated 1 December 2022.

This letter is also worth a read, as it contains the Debtors’ substantive response to the Bahamian authorities in light of the Bahamian Attorney General’s speech as detailed in the previous Exhibit. It also reinforces the notion of the automatic stay, and requests the filings / orders of the SCB regarding FTX and the actions taken by the BSC, SBF and Gary Wang in the days prior to the filing of the Debtors’ chapter 11 petition. There’s also some gems in the exhibits to the letter, if you’re into ridiculous rhetorical flourish.

Exhibit G – Letter from BSC’s counsel to Debtors’ Bahamian counsel, dated 7 December 2022.

The letter references a Supplemental Order of the Chief Justice of the SCB that confirms that the BSC is holding FTXDM assets.

Exhibit H – Letter from JPLs’ counsel to Debtors’ counsel, dated 7 December 2022.

The letter seeks access to Slack, Google Mail / Google Chat, Google Drive, AWS Cloud Platform, and Google Cloud Platform BigQuery. The letter acknowledges that clones of certain live databases have been made.

Exhibit I – E-mail from JPLs’ counsel to Debtors’ counsel, dated 9 December 2022.

The e-mails that Debtor referred to in which its counsel sought a meeting with counsel for the JPLs as well as counsel for the BSC, and to which counsel for the JPLs replied that it would check its schedule and revert.

The Real Property Issue

The JPL Motion To Dismiss The Case Of FTX Property Holdings

On 12 December 2022, the JPLs filed a motion to dismiss the chapter 11 case of FTX Property Holdings Ltd. (“FTX Property Holdings”) currently before the Court (In re FTX Property Holdings Ltd., Case No. 22-11076-JTD, D.I. 1) (the “JPL Motion to Dismiss”). (D.I. 213)

As an administrative matter, while counsel for the JPLs, in their filing, scheduled the JPL Motion to Dismiss (D.I. 213) for hearing on 11 January 2023, the Court, during the 14 December Hearing, indicated to counsel that such date would be inappropriate, as it is the date of the second day hearing in this case. (D.I. 227) The Court instructed counsel for the JPLs and and the Debtors to discuss and find a mutually agreeable date on which the JPL Motion to Dismiss could be heard. (D.I. 227) As of the time of this writing, the parties have not yet reached an agreement on an appropriate date. We will update this section of the FTX Files once a date is selected.


In their motion, the JPLs state that “FTX Property Holdings is a Bahamian corporation that does only one thing, [sic] own real property located in The Bahamas,” and furthermore that, “All of its known assets and creditors are located in The Bahamas.” (¶ 1) With respect to the United States, the JPLs state that FTX Property Holdings “has no assets here, no creditors here, and it has never done business here.” (¶ 1)

What we are to basically understand from the JPLs about FTX Property Holdings is that it is what its name implies: a holding company for FTX’s Bahamian real estate (a total of 35 properties, including, e.g., FTX DM’s offices) and conducted no other business nor holds any other assets. (¶¶ 12, 13) FTX Property Holdings did not even have its own bank accounts, nor did it pay for any of the property that it owns or for any of the maintenance thereof, the JPLs acknowledge. (¶ 14) All of those payments were made directly by FTX DM, and in terms of the accounting, those payments by FTX DM were treated as loans by FTX DM to FTX Property Holdings. (¶ 14) As of 5 October 2022, the FTX DM “loans” to FTX Property Holdings totaled at least $256.3 million. (¶ 14) The JPLs further assert that FTX DM is the only substantial creditor of FTX Property Holdings, and that, as far as the JPLs have been able to determine, FTX Property Holdings has neither any assets nor any creditors in the United States. (¶ 15)

The JPLs acknowledge that the Debtors have asserted that FTX Property Holdings is a wholly owned subsidiary of FTX Trading, Ltd. (¶ 17) However, they note that, according to FTX Property Holdings’ register of directors, there are 2 directors of FTX Property Holdings: SBF and a Mr. Ryan Salame (“Salame”). (¶ 18)


In the JPL Motion to Dismiss, the JPLs present 4 distinct arguments as to why the chapter 11 case of FTX Property Holdings should be dismissed by the Court, as follows:

1.  Because recognition of any order of this Court by any Bahamian court would not be permissible under Bahamian law, dismissal is warranted under §305(a) of the Code.

2.  It is in the best interests of creditors that this case be dismissed pursuant to the Court’s authority under §1112(b) of the Code.

3.  The Debtors lacked valid corporate authority to file this case on behalf of FTX Property Holdings; and

4.  Because of its lack of connection to the United States, FTX Property Holdings lacks eligibility to be a debtor in a case before the Court, and so dismissal is proper pursuant to §109(a) of the Code.

We discuss each of these arguments below.

No Bahamian Recognition

The JPLs seek dismissal of FTX Property Holdings’ case pursuant to Code §305(a)(1) for the reason that the courts of The Bahamas offer a more appropriate forum. (¶ 28, 30) They note that considerations for dismissal under §305(a)(1) must be on a case-by-case basis. (¶ 25) They further state that “A court facing a request to abstain in favor of a foreign proceeding ‘must satisfy itself that the foreign forum will determine and adjust the parties’ rights in a fair and equitable manner.’ In re Compania, 376 B.R. at 434.” (¶ 29) For reasons we set forth below, we question whether there would even be a case in The Bahamas for a court therein to consider.

This claim for relief relies on the notion that fundamentally all of the creditor claims against FTX Property Holdings are held by Bahamian entities (mostly FTX DM). (¶ 30) The JPLs represent that because the JPLs “are authorized and empowered to take all and any necessary steps to protect the assets of FTX Digital…[they] will enact the steps necessary to liquidate or otherwise dispose of [FTX Property Holdings]’s assets for the highest possible price for the benefit of creditors.” (¶ 30)

This, to us, is conclusory nonsense. First, FTX Property Holdings is wholly owned by FTX Trading Ltd., which is the relevant insolvent entity. We don’t have a view into the financials of FTX Property Holdings, and therefore, we don’t know if the entity is insolvent in and of itself. We also don’t have a view into the loan documentation, if any exists, under which FTX DM “lent” FTX Property Holdings the purchase price of, and maintenance costs for, its real estate assets. The only thing we have to support the proposition that the transactions should be considered a loan is a representation from the JPLs that “the payments by FTX Digital for FTX Property Holdings’ properties were accounted for as loans from FTX Digital to FTX Property Holdings.” (¶ 14) Clarifying, the JPLs state that, “As of October 5, 2022, FTX Digital’s records showed an intercompany receivables balance from FTX Property Holdings of at least $256.3 million.” (¶ 33) The world might be a much simpler, if not murkier, place if accounting treatment alone were the equivalent of loan documents and properly filed security interests, however, even in The Bahamas, that is not the world in which we live. 

As one might assume, security interests in real property do exist within Bahamian law, in the form of “debentures.” (See, e.g., Lexology GTDT: Loans & Secured Financing, Bahamas, p. 11) To the best of our knowledge, FTX DM did not record any debentures in the Registry of Records kept by the Registrar General of The Bahamas, pursuant to standard practice in the country for the recordation of mortgages and various other security interests, though, note also, that recordation is not a requirement for the perfection of a security interest in real property under Bahamian law. (Id., pp. 11-12) In this “smoke ’em if you got ’em” moment, the JPLs fail to present any evidence of any security interest of FTX DM in any of the real property held by FTX Property Holdings.

Without any loan documentation or security interests, we fail to see how FTX Property Holdings could be in default of its obligations, if any were even to exist, to FTX DM. (e.g., What were the repayment terms? Was there a repayment schedule? If repayment was supposed to be made, did FTX Property Holdings default on any payments? etc.) Absent some cause for default, even if FTX Property Holdings’ chapter 11 case were to be dismissed, we fail to see by what authority would the JPLs cause it to be subject to an insolvency proceeding under which its assets could be liquidated for the benefit of *its* creditors, viz., FTX DM for the overwhelming most part. Absent any statutory power or court-ordered receivership, a filing for FTX Property Holdings would require the consent of both SBF and Salame, as the JPLs have stated,(¶¶ 20, 44), though we cover why this is might also be inaccurate in the context of the bankruptcy of FTX Trading Ltd., below. Would the Debtors, then, have to voluntarily file a bankruptcy proceeding for FTX Property Holdings in the Bahamas? And absent an actual insolvency for the entity itself, could they? Or would this simply be a voluntary liquidation of FTX Property Holdings’ real property? If the latter, why would the supervision of a Bahamian court be required for the sale of real property in the ordinary course of business? And under what circumstances would the Debtors then be obligated to distribute the proceeds of those sales to FTX DM? Would FTX DM sue FTX Property Holdings for the return of its capital? If so, under what theory?

Even if we accept the JPLs’ assertions that the courts of The Bahamas are a more appropriate forum than the current Court for the administration of a bankruptcy case of FTX Property Holdings, we nevertheless cannot fully establish whether there would even be such a case before the Bahamian courts.

The JPLs also make arguments with respect to the relative efficiency of having FTX Property Holdings’ real property assets liquidated under a Bahamian proceeding. They state, “Because FTX Digital is the largest creditor of FTX Property Holdings, and all estate property is located in The Bahamas, dismissing these proceedings in favor of the Bahamian Liquidation Proceeding would simplify and expedite the resolution of claims and matters pertaining to potential distributions.” (¶ 36) But there’s something of a mix-up in the JPLs’ argument here. FTX DM might be the largest creditor of FTX Property Holdings, if we can get past the previously discussed gating issue of whether FTX Property Holdings even owes anything to FTX DM. Leaving that aside, that just makes FTX DM one of several creditors of the Debtors, as FTX Property Holdings is wholly owned by FTX Trading, Ltd. (D.I. 92), 1 of the 4 top-level Debtor entities whose cases are here being jointly administered. (D.I. 128) The relevant “estate” to discuss is the Debtors’ estate, all of the property of which is not located solely in the Bahamas. By “simplify and expedite the resolution of claims and matters pertaining to potential distributions,” (¶ 36) all we hear is that a dismissal of this case would simplify and expedite the squirreling away of property of the estate for the benefit of a specific subset of general unsecured creditors in contravention of the U.S. Bankruptcy Code, and therefore, of U.S. law.

The JPLs also state that “Any efforts to restructure the debtor’s business and equitably distribute assets to creditors in a U.S. chapter 11 case would be futile, given that the Bahamian courts cannot, under Bahamian law, give effect to orders of this Court with respect to a chapter 11 case for FTX Property Holdings.” (¶ 37) But, as discussed above, we’re not sure why a Bahamian court would have to recognize an order of this Court in order for FTX Property Holdings to sell its real estate holdings. The Debtors would require leave of the Court to make such sales, but we fail to understand what role a Bahamian court would play in any instance of the Debtors, armed with the appropriate authority of this Court, effectuating real property sales in the Bahamas. Would this occur in some hypothetical case in which FTX DM would sue to block the sale of the real property? But under what theory? Again, to the best of our knowledge, the real property of FTX Property Holdings is not collateral in which FTX DM possesses any form of perfected security interest. Try as we might, we can’t make sense of this argument from the JPLs.

To support their argument, the JPLs cite a 2005 ruling of the U.S. Bankruptcy Court for the Southern District of Texas in In re Yukos Oil Co., 321 B.R. 396, 411 (Bankr. S.D. Tex. 2005) for the proposition that a U.S. bankruptcy court found that the reorganization of the Russian oil company Yukos before it “could not be effectuated properly because most of Yukos’ assets were located in Russia and because the Russian government, a key party in interest, would not appear in the U.S. proceeding.” (¶ 37)

We disagree with the JPLs’ use of Yukos. In Yukos, the court acknowledged that “Yukos’ disputes with agencies of the Russian government precipitated the filing of the instant Chapter 11 case.” (Yukos, at 401) Furthermore, “[the Yukos CEO] testified that among the issues Yukos was negotiating with the Russian government was the election of a new board of directors. He testified that, although he believed the Russian government was sincere in negotiating, he had heard rumors of a plan to divest Yukos of its largest subsidiary.” (Id.)

To state something that should be pretty obvious, The Bahamas are not Russia. Nor, whether they look at 2005 Russia or 2022 Russia, should they—at least in our opinion—try to characterize themselves to be. And nor is FTX to The Bahamas what Yukos was to Russia, and it does not benefit The Bahamas to characterize it as such.

Yukos’ assets were oil and gas within Russia. (Id., at 411) The court specifically acknowledged that, “the evidence indicates that Yukos was, on the petition date, one of the largest producers of petroleum products in Russia, and was responsible for approximately 20 percent of the oil and gas production in Russia.” (Id.) While not an entirely dispositive matter, did this weigh into the court’s calculus for dismissal. “The sheer size of Yukos, and correspondingly, its impact on the entirety of the Russian economy, weighs heavily in favor of allowing resolution in a forum in which participation of the Russian government is assured.” (Id.) Energy resources, in our experience, tend to be viewed by sovereign governments as items of strategic importance and national significance. A penthouse condo at The Albany? Not so much.

Furthermore, of central importance to the Yukos case were taxes levied and other actions taken by the Russian government. Whether those taxes and actions were “fair” or “just” (in a normative understanding of the words) aside, the Russian government was exercising its authority, purportedly under its laws, over Yukos. Ergo, it was “a key party in interest.”

Here, FTX Property Holdings didn’t file its chapter 11 case simply in order to contest actions taken against it by the Bahamian government; it filed it because its parent entity (FTX Trading, Inc.) was insolvent and its assets are part of the property of that entity’s estate. Similarly, whereas in Yukos, the assets of Yukos were of national and strategic importance to Russia as a sovereign nation, some pretty sweet (in our opinion) apartments in The Bahamas are not of similar strategic importance to The Bahamas. At least we would hope not, for The Bahamas’ sake.

Best Interests of Creditors

The JPLs posit that dismissal of FTX Property Holdings’ case is warranted under §1112(b) of the Code because such dismissal would be in the best interests of creditors. (¶¶ 40-42) Again, however, it seems as though the JPLs are taking the biased and reductive view that “creditors” here simply means creditors of FTX Property Holdings, and not creditors of the Debtors.

We’ve discussed this at length, above, but for fun, here  we go again:

1.  Property of FTX Property Holdings is property of the Debtors’ estate, because FTX Property Holdings is wholly owned by a top-level Debtor;

2.  The Debtors have creditors consisting of more than just FTX DM;

3.  The JPLs have not been able to demonstrate that FTX DM had any form of security interest in any of the property of FTX Property Holdings; and

4.  We can’t even really be sure that FTX DM is even a creditor of FTX Property Holdings’ at all, because we don’t believe that an accounting line-item and its characterization on the books of FTX DM would serve as valid proof of a claim absent any other evidence.

In light of the above, this argument is incomprehensible, and we are not persuaded.

Lack of Authority to File

We can agree with the JPLs that those acting on behalf of corporations must have valid authority to do so. The JPLs cite SCOTUS in Price v. Gurney, 324 U.S. 100 (1945) for the proposition that if the filer of a petition on behalf of a corporation lacked the proper corporate authority to file the petition, the petition must be dismissed. (¶ 43) As we noted above, FTX Property Holdings had two directors, SBF and Salame. (¶ 18)

Per the motion, the Articles of Association (a corporate governance document for Bahamian companies) for FTX Property Holdings state that, in order for FTX Property Holdings to validly institute legal proceedings (e.g., the filing of the petition to commence this case), the consent of both of the 2 directors of FTX Property Holdings is required. (¶ 44) Furthermore, the JPLs assert that, with respect to consenting to the “Omnibus Corporate Authority” (which, inter alia, empowered Ray to file the petition in this case), the two directors did not meet, and that Salame did not consent. (¶ 44)

The argument here, as one might have guessed, is simple: 1) Salame’s consent was required in order to properly file a chapter 11 case before the Court; 2) such consent was not secured by the Debtors; and 3) therefore the filing of the petition commencing this case was not properly authorized. (¶ 44)

This one sort of a “gotcha!,” right? No. Probably not even a little bit.

In the Omnibus Corporate Authority signed by SBF, Ray is appointed as CEO of, inter alia, FTX Trading Ltd., and a Mr. Stephen Neal (“Neal”) is appointed as, inter alia, Chairman of the Board of FTX Trading Ltd. (D.I. 1, p. 12) Furthermore, it allows Ray to appoint, inter alia, 1 to 3 other individuals as new directors of FTX Trading Ltd. (D.I. 1, p. 12) Ray did, subsequently, appoint two individuals as directors of FTX Trading, Ltd., such being Joseph J. Farnan (“Farnan”) and Matthew A. Doheny (“Doheny”) (collectively, the “FTX Trading Independent Directors”). (D.I. 24, ¶¶ 47(d), 47(e)).

One would imagine that, as a matter to be taken up by Farnan and Doheny immediately upon appointment, they would further effectuate the intent of the Omnibus Corporate Authority by, inter alia, causing all subsidiary directors to be removed and replaced to the extent permissible by the law or laws governing the corporate governance of each subsidiary entity, respectively. In the instant case, because FTX Property Holdings is an International Business Company incorporated in the Bahamas (D.I. 213, ¶ 12), the law with which we are concerned is the International Business Companies Act of the Bahamas (the “IBCA”). Pursuant to §42(2) of the IBCA, directors can be removed. (IBCA, §42(2)) Furthermore, looking at FTX Property Holdings’ Articles of Association, filed to the docket as Exhibit B to the Simms Declaration in Support of the JPL Motion to Dismiss (D.I. 214), Section 52(5) thereof provides that “The office of a Director shall ipso facto be vacated:- (5) if he is removed by Resolution of Members, with or without cause, or if his resignation in writing is requested by the remaining Directors.” (D.I. 214, p. 9) Here, acting in representation of FTX Trading, Ltd., the sole owner of FTX Property Holdings, the FTX Trading Independent Directors would have had the valid power to remove and replace Salame in his capacity as director of FTX Property Holdings. We would expect that they did.

So, it’s likely that as of the time of filing of the petition for this case, Salame had been sliced from the Board of Directors of FTX Property Holdings, and therefore his consent to the filing of the petition was not required. 

Ineligibility to File

In something of an eyes shut, hail mary of an argument, the JPLs argue that the FTX Property Holdings chapter 11 case should be dismissed under §109 of the Code for the lack of connection of FTX Property Holdings to the United States under the factors set forth in §109(a). (¶ 45) The JPLs argue that the Debtors “have not provided any evidence that FTX Property Holdings…has any business or domicile in the United States, has or has had any cash, or has directly or indirectly funded any dollars in the United States. Nor is there any evidence that FTX Property Holdings holds any amount of property located in the United States.” (¶ 45)

The mention by the JPLs of the lack of any funds flowing into or through the US is interesting, as it might pre-empt a response based on the recent ruling of the United States District Court for the Southern District of New York in Arcapita, a case involving the jurisdiction of a U.S. bankruptcy court over a Bahraini bank. In re Arcapita Bank B.S.C.(C), No. 21 CIV. 8296 (AKH), 2022 WL 1620307 (S.D.N.Y. May 23, 2022) In Arcapita, the court found that jurisdiction of the U.S. Bankruptcy Court for the Southern District of New York over Arcapita Bank B.S.C. (C) was proper because the bank had routed certain financial transactions through correspondent bank accounts in New York. However, the Debtors don’t need Arcapita.

FTX Property Holdings is a wholly owned subsidiary of FTX Trading, Ltd., a Debtor entity which would pass muster under a §109(a) analysis. Being a wholly owned subsidiary, all of its securities are pledged to its owner, FTX Trading Ltd. We would argue that it’s through that pledge of securities to an entity that is subject to jurisdiction that FTX Property Holdings is itself subject to jurisdiction. As for the research for evidentiary support, we leave that to the poor junior associates at Debtors’ counsel. We’ve said enough.

Our Take

Ultimately, what’s at stake here is whether the $256.3 million in Bahamian real estate owned by FTX Property Holdings should be liquidated for the benefit of all FTX creditors (including, for example, FTX DM), or whether the liquidation proceeds should be used to satisfy the claims of FTX DM (in proxy for the claims of its own creditors) only.

To us, it’s undeniable that the real estate holdings of FTX Property Holdings are property of the estate. FTX Property Holdings is a sister entity to, and not a subsidiary entity of, non-Debtor FTX DM (each being a subsidiary of FTX Trading Ltd.). This wouldn’t even rise to the level of an inter-debtor claim, because, as just mentioned, FTX DM is not a debtor in the Debtors’ chapter 11 case.

Moreover, as far as we’re aware, FTX DM doesn’t possess any sort of security interest in the property for which it loaned FTX Property Holdings the purchase funds. (Side note: this raises an interesting question about the appropriateness of inter-affiliate security interests where the affiliated companies are corporate “siblings” and not parent-subsidiary.)

In our minds, the correct outcome here is that the real estate holdings of FTX Property Holdings would be liquidated, with proceeds going to benefit all creditors of the Debtors. FTX DM, like any other creditor, could file a proof of claim, and sit pari passu with all of the other general unsecured creditors of the Debtors.

The Stay Relief Issues

The Miami Stay Relief Motion

To be frank, we are more than a little exhausted from writing our coverage of some of the more substantive motions in this case. While there are definitely things worth discussing with respect to this motion, we’re going to take it a little easier in writing about it.


As basketball fans might know, the arena in which the Miami Heat play is called FTX Arena. Why? Oh, because FTX entered into an agreement with the owners, Miami-Dade County, to pay them $135 million (sorry, what?) over 19 years for the naming rights to the stadium (the “Naming Rights Agreement”). Apparently that figure has been out for some time, but this is the first we’re hearing of it, and…wow. (Side note, who comes up with these valuations?) (Other side note: apparently agreed to pay $700 million over 20 years for the naming rights to the Lakers’ arena, and now everybody there must be like 👀.)

Anyhow, let’s dive into it…

On 22 November 2022, counsel for Miami-Dade County (the “County”) filed a Motion for Relief from the Automatic Stay in order to terminate the Naming Rights Agreement (the “Miami Naming Rights Motion”). (D.I. 135)

The Naming Rights Agreement

In April 2021, the County entered into the Naming Rights Agreement with West Realm Shires Services, Inc. (d/b/a FTX.US) (hereinafter, “FTX.US”). (¶ 6)

Note, the Naming Rights Agreement itself was not appended as an Exhibit to the Miami Naming Rights Motion, nor in any supporting declaration with respect to the same, of which we found none. Nevertheless, the Naming Rights Agreement is a matter of public record, as the County is a party to it, and it can be found on the County’s website here. The document does not only contain the Naming Rights Agreement, but also the results of the diligence performed by the County on FTX and related persons, the substance of its review of the deal with FTX, and its approval of such deal / execution of the Naming Rights Agreement by the County. There’s a lot of information, but there’s nothing in there that’s wildly incendiary. To us, the most shocking thing here is the notion that a major municipality would enter into a long-term contract of great visibility and significance with a company that: a) had, at that time, been around for less than 2 years; and b) had its primary lines of business in a mysterious, relatively unregulated industry that, itself, had only been around for a handful of years. As professional managers of risk, just writing that sentence gives us the shakes. But hey, money talks, right?

As of the petition date, FTX.US paid the County all of the payments it owed to the County as of such date, with its next payment to the County being due on 1 January 2023. (¶ 8) And, of course, the FTX name has been on the arena, etc., since the execution of the Naming Rights Agreement. (¶ 11) Per the Naming Rights Agreement, FTX is obligated to, inter alia, comply with any federal or state law that relate to FTX.US’s business in the United States. (¶ 12)

A Most Questionable Breach

The County asserts that FTX.US has failed to comply with the laws that govern its online financial exchange platform and that the County is therefore entitled to terminate the Agreement. (¶ 18) We question, however, whether this can be empirically true absent a regulatory finding or a conviction in an enforcement action. Because FTX.US’s purported failure to comply with law to which it is subject is the only current default, and thus the only possible presently applicable grounds for termination by the County, the question of whether FTX.US can be deemed to have failed to comply with law to which it is subject absent a regulatory finding or enforcement conviction is a gating question as to whether the County has any grounds for termination at all. If the questions is answered in the negative, the claim underlying this motion is unripe. The claim is furthermore not likely to be the first to ripen, unless a regulatory finding or enforcement conviction occurs within the next month or so. To us, given where the various investigations into FTX are presently, this seems unlikely. The County’s motion likewise fails to consider that a breach with respect to, say, a regulatory failure could, in fact, be a curable breach pursuant to Section 9.1.2 of the Naming Rights Agreement, but let’s leave that aside for the time being.

Because a payment of $5.5 million is owed by FTX.US to the County on 1 January 2023 (¶ 8), and assuming (with perhaps overwhelming reasonability) that such payment is not made, and assuming further that, on 2 January 2023, the County notifies FTX.US in writing of its default under Section 9.1.1 of the Naming Rights Agreement, and assuming further still (again with the aforementioned amount of reasonability) that FTX.US does not cure such default by remitting payment within 10 business days of the County making written notice to it of the same, then, on 17 January 2022, the County would have a ripe claim of default by FTX.US pursuant to which it could file before the Court a motion for relief from the stay to terminate the Naming Rights Agreement.

Also, there’s an ipso facto clause tucked away in Section 9.1.3 of the Naming Rights Agreement, and we’re just happy the County didn’t try to use it.

The Motion

To be clear, we don’t think this motion is ripe. Leaving that aside, we here analyze the County’s argument and relief requested as presented in the Miami Naming Rights Motion.

§362(d)(1) permits a bankruptcy court to provide relief from the stay for cause. As the County states, the term “cause” is not defined in the Code, and it is up for the Court to determine what constitutes cause on a case-by-case basis. (¶ 20) The County continues that bankruptcy courts typically consider consider “(i) the hardship to the estate if stay relief is granted; (ii) the hardship to the movant if stay relief is not granted; and (iii) the underlying merits.” (¶ 21)

The County notes that the Naming Rights Agreement contains a penalty provision against FTX.US in the event of a termination by the County as a result of an FTX.US default, under which, in addition to other potential damages, FTX.US would owe the County an amount totaling the payments it would otherwise have made for 3 years post-termination. (¶ 15) The County further notes that a termination of the Naming Rights Agreement pursuant to its (likely unripe) present claim would result in a penalty of $17 million accruing to the County, whereas such figure would be $23 million if the Naming Rights Agreement is terminated later pursuant to a claim of default by FTX.US for failing to remit payment. (¶¶ 24, 25) Among the objectives of a chapter 11 proceeding are the preservation of the debtor’s estate and the maximization of recovery by creditors. The effect of a delay beyond 1 January 2023 of an eventual grant of relief from the stay for the County to terminate the Naming Rights Agreement would serve to increase the amount of the penalty, to be sure, but does that actually harm the Debtors’ estate? All it really does is give the County a bigger general unsecured claim. Sure, that claim would have been smaller had the Court granted relief sooner, and maybe that does count against maximizing relief for all creditors. In any case, we don’t think any of tis is going to be relevant to disposition on this motion.

To look at the above-cited factors typically considered by the Court, we first examine “the hardship to the estate if stay relief is granted.” Now, there’s two contexts to consider here: 1) the value of the contract to the reorganized Debtors (if they exist); and 2) the value of the contract as an asset in the context of assumption and assignment under §365 of the Code.

In the first context, having a big shiny FTX logo on the side of a major stadium might, at first, seem like an important corporate branding asset. Now, we’ve discussed elsewhere in The FTX Files why we think a successful reorganization of FTX (i.e., it emerges from bankruptcy and does business with customers again) is just not a realistic proposition. Consumer trust is huge in the financial services industry. For the FTX businesses, that trust has long since been flushed away. But, even if a successful reorganization of the Debtors’ underlying businesses is possible, it seems like of first priority for new management would be to seek to have the letters “F,” T,” and “X” removed from the alphabet, and certainly not illuminated on the side of an arena.

The second context is messier, as it involves a series of conditional, gating questions, only some of which can be answered at this time. The first is whether the Naming Rights Agreement is even an executory contract, for which, curiously, there is no statutory definition. Under the “Countryman Test,” (i.e., performance remains for each party and the agreement is enforceable by a court) we would argue that it is, because performance remains for both FTX.US and the County, and it is enforceable by a court. However, we accept that an argument can be made that while FTX.US must continue to perform on its payment obligations, no further performance exists for the County.

Leaving this aside, and proceeding on the basis that the Naming Rights Agreement is an executory contract, we now arrive at whether the Debtors would choose to reject, assume or assume and assign it.

To reject would be simple, and moreover, it’s also what the County wants, though this outcome may adversely affect both the amount of, and even the very existence of, any allowable claims the County may have as an unsecured creditor of the Debtors.

To assume without assignment, as we’ve discussed above, seems to us a wholly ridiculous proposition. Far from erasing the name “FTX” from anyone’s memory, as the Debtors should want to do, an assumption here would be a big, embarrassing, 135-million-dollar albatross around the reorganized Debtors’ neck. As to whether the reorganized Debtors could make use of the Naming Rights Agreement by simply changing the name emblazoned all over Miami-Dade County, pursuant to Section of the Naming Rights Agreement, they could, provided that the County, and its Board, consent. We wouldn’t hold our breath.

To assume and assign might be a possibility, though the consent requirement discussed above would certainly put an arrow in the County’s quiver should they decide to contest the assignment. Nevertheless, we’d expect that an assumption and assignment is something that the Debtors are at least considering, so much so that we’re going to leave this issue aside for the moment. Debtors’ counsel pays their associates well enough to do the heavy lifting in terms of research and analysis here. We look forward to picking apart what they come up with soon. 

Now, turning to factor (ii) from up above—the hardship to the movant if stay relief is not granted—the County is actually a rather sympathetic movant. Whereas gratuitous sums of money paid to Titan Grey might go towards the purchase of several Ferraris and perhaps a gently-used megayacht (each strictly for business purposes, naturally), as the County states in its motion, all of the net proceeds of the County’s receivables from the Naming Rights Agreement are used to fund programs to combat gun violence, address at-risk youth, and provide economic opportunities within Miami-Dade County. (¶ 9) And yes, we would like to further scrutinize the County’s use of the word “net,” as in, net of what, exactly? But nevertheless, assuming that a sizeable chunk of the revenue goes towards the mentioned programs, without such funding, the County’s programs would be harmed, and by extension, so to would the people of Miami-Dade County be. The County notes that keeping it locked into a “zombie agreement” (our words) prevents it from finding a new source of revenue to supplant that which it was receiving from FTX.US. (¶ 16) Perhaps of equal importance, the County notes in its motion all of the negative media attention being given to, inter alia, FTX and SBF. (¶ 16) Using different words, the County states that Miami-Dade County’s continued association with FTX is starting to become a really bad look. (¶ 16) We can’t disagree.

Factor (iii) is the toughest to consider here, because, as we’ve discussed above, we don’t think there’s yet a ripe claim of default by FTX.US which gives the County a valid basis upon which to file this motion. If FTX.US does wind up defaulting on its 1 January 2023 payment obligation—and, given the timing, we think that it will—then the County can file a new motion with updated grounds at the appropriate time.

Let’s Make A Deal

As a final word, one of the (many) reasons we love bankruptcy law so much is that it’s not just bare-knuckle litigation, but also slick and savvy dealmaking. And here, there’s maybe an opportunity for some of the latter.

We’re maybe not the most clued-in as to what the price of the naming rights for the current FTX Arena should be, but there’s a chance it’s even higher than what FTX is currently paying for it. (Though, contra, with the Heat presently (as of 16 December 2022) having a worse record than even the Knicks, we might be getting ahead of ourselves.)

In any case, we wouldn’t find it entirely unexpected here if Debtors’ counsel manages to pull of a deal that nets a little extra for the Debtors’ estate, sees the naming rights finding a home with a new (hopefully more stable) company, and Miami-Dade County once again being able to fund its civic programs without worry. Crazier things have happened in the hallways of a bankruptcy court, and we’ll just have to wait and see how this all shakes out.

The Riot Stay Relief Motion

On 16 December 2022, North America League of Legends Championship Series, LLC (referred to in their motion and as shall be hereinafter referred to as “Riot”) filed a motion to either compel the Debtors to reject their contract with Riot or for relief from the stay for Riot to terminate said contract on its own (the “Riot Stay Relief Motion”). (D.I. 243) Supporting declarations were filed by counsel for movant Brian Davidoff (D.I. 244) and CEO of movant Vyte Danileviciute (D.I. 245).

Coverage Note

Stay relief motions are common pleadings in chapter 11 cases, and, as such, tend not to vary quite so much from motion to motion. In light of our coverage of the Miami Stay Relief Motion, above, we will limit our coverage of the Riot Stay Relief Motion to its unique points of fact and argument.

Core Arguments

Riot Games is a company that makes and distributes a computer game, League of Legends. League of Legends is a very popular game. It’s so popular, in fact, that people watch other people play the game, in a phenomenon generally known as “eSports.” There is a lot of money in eSports. Furthermore, there is a lot of money in sponsoring eSports. Particularly, these sponsorships are being broadcast primarily to a youthful demographic interested in “internet culture,’ with eSports being one component of such culture, and with cryptocurrency being perhaps another.

The argument here shouldn’t be shocking, at this point: the FTX name is all over Riot’s game / tournament / whatever else, and the FTX name is now also associated with a widespread fraud of its own doing. Accordingly, Riot does not wish to be bound to the terms of such contract as being so bound is actively harming Riot’s brand identity.

Interesting Points

SBF was an avid League of Legends player, and would apparently play the game during important meetings. (¶ 12)

“Prior to entering into the agreement with FTX, Riot considered other cryptocurrency platforms, but selected FTX for its reputation among Riot’s audience.” (¶ 14) Woops!

“The Miami Heat and Formula 1 announced that they have terminated their naming rights agreements.” (¶ 17) This is woefully inaccurate. Miami-Dade County has filed a motion to terminate their agreement with FTX, which we’ve covered above. And while the Mercedes F1 team—and its star driver Lewis Hamilton—might be the most popular in all of F1, the term “Formula 1” describes the league itself, consisting of 10 teams, of which Mercedes-AMG Petronas Formula One Team (“Mercedes F1”) is only 1. The Formula 1 league does have its own sponsors, but FTX, to the best of our knowledge, is not one of them. FTX does (or did) have a sponsorship deal with the Mercedes F1 team, and Riot does correctly state that Mercedes F1 has taken some action with respect to removing the FTX markings from its livery, etc. However, with nothing on the docket concerning the contract between FTX and Mercedes F1, much less a valid order from the Court either compelling a rejection of the contract by FTX or allowing Mercedes F1 relief from the stay to terminate, we query whether  Mercedes F1’s actions violated the stay, and might therefore give rise to a cause of action. We also don’t know, even if there was a cause of action, whether pursuing it would even be of economic merit. Time will tell.

The Riot-FTX agreement contained a morals clause, which Riot asserts that FTX breached, and such a breach being non-curable. Therefore, FTX would not be able to assign the contract. (¶ 38 et seq.)

The Robinhood Shares Issue

The Debtors’ Robinhood Stay Motion

On 22 December 2022, the Debtors filed a motion to enforce, or, in the alternative, to extend the automatic stay, specifically with respect to approximately 56 million shares (the “Robinhood Shares”) of Robinhood Markets, Inc. (hereinafter, “Robinhood”) (the “Robinhood Stay Motion”). (D.I. 291)

Debtors’ counsel Brian Glueckstein filed a declaration in support of the Robinhood Stay Motion on the same date. (D.I. 292)

So, This Is Quite A Story…

What follows is all according to the Debtors in their Robinhood Stay Motion:

There are approximately 56 million shares of Robinhood sitting in an account at ED&F Man Capital Markets Inc. (“EDFM”) in New York. (¶ 1) This whole issue is centered on who owns those shares, and, therefore, what they can or cannot legally do with such shares.

The shares, currently frozen, are held in street name in an account owned by a company registered in Antigua & Barbuda called Emergent Fidelity Technologies, Ltd. (“Emergent”). (Id.) Emergent is a non-debtor in the jointly administered FTX cases, and is a holding company that has no other business other than its ownership of the account at EDFM which holds the 56 million Robinhood shares. (Id.) SBF owns 90% of Emergent. (Id.)

A company called BlockFi, Inc. (together with BlockFi Lending LLC and BlockFi International LLC, hereinafter, “BlockFi”) which, for at least 3 years prior to the petition date, had lent money to Alameda. (¶¶ 2, 4) In the days prior to the petition date for, inter alia, Alameda, BlockFi had sought further protection on its loans by “threatening to seek remedies against Alameda if Alameda did not pledge additional collateral for those loans.” (¶ 4) Caroline Ellison, then-CEO of Alameda, allegedly with the encouragement of SBF, purportedly agreed to pledge additional Alameda assets to BlockFi, including the 56 million shares of Robinhood in question. (Id.) As the Debtors assert, “The Robinhood Shares were included in these pledged assets by Alameda’s then-CEO, despite the fact that the Robinhood Shares were nominally held by Emergent, because Alameda had then, and continues to have, a property interest in the Robinhood Shares.” (Id.) On 28 November 2022, BlockFi both filed for bankruptcy protection and commenced an adversary proceeding in the U.S. Bankruptcy Court for the District of New Jersey against Emergent and EDFM for turnover of the Robinhood Shares. (¶ 5) In their complaint, BlockFi made no mention of Alameda or FTX. (Id.)

On its own, this is somewhat dramatic. Nevertheless, there’s more.

A Mr. Yonatan Ben Shimon (“YBS”) is a pre-petition creditor of FTX Trading. (¶ 2) Somehow, during the same time in which BlockFi was attempting to gain control of the Robinhood Shares, YBS successfully petitioned the courts of Antigua & Barbuda for the appointment of a liquidator of Emergent, and the liquidation of its holdings for the repayment of its creditors. (¶ 6) Nevertheless, the Debtors posit that the court in Antigua was nevertheless aware that the funds used to purchase the Robinhood Shares for Emergent were FTX Trading funds. (Id.)

But wait, there’s more.

On 11 December 2022, prior to his arrest, SBF apparently petitioned the court in Antigua to displace the receives in order for SBF to regain control of Emergent. (¶ 7)

Now What?

So, what does this all mean? To recap, BlockFi, SBF and the Debtors each think that the Robinhood Shares belong to them. YBS wants the shares liquidated so he can be paid back. 

In the Robinhood Stay Motion, request the Court to confirm clearly that the automatic stay, as it applies to the Debtors’ cases, applies to the Robinhood Shares, and so then the Delaware Bankruptcy Court would later be able to determine whether the Robinhood Shares are or are not property of the Debtors’ estate. In order to confirm the applicability of the stay, the Court would need to be satisfied that there exists for the Debtors an “arguable claim of right” to, or a “colorable basis for asserting an interest in” the Robinhood Shares. (¶ 9)

Our View

The bar for the application of the automatic stay is pretty low by design. Fundamentally, what the bankruptcy process exists to do is to prevent an asset-grab by creditors of a debtor. The facts here thus far, to us, sure look like an asset-grab, particularly with respect to the YBS action in Antigua.

YBS is a creditor of the Debtors because he deposited $11 million worth of cryptocurrency into the exchange. (¶ 40) In the information provided as of the date of this writing, we have no reason to believe that YBS has any direct connection with Emergent, whether as a creditor or minority equity holder. We’re therefore not even sure why the court in Antigua would appoint a liquidator of Emergent, where Emergent was owned in majority by SBF, not the Debtors, and YBS is not a creditor of either SBF or Emergent, but rather of the Debtors. This just looks like an end-run, with the help of the courts in Antigua, somehow. At the end of the day, We can’t see this being successful in getting EDFM to unfreeze the Robinhood Shares for the benefit of an Antiguan liquidator. To us, even SBF stands a better shot.

With BlockFi, this is now going to become a wrestling match between powerhouse firms Sullivan & Cromwell (for the Debtors) and Kirkland & Ellis (for BlockFi). At this stage, we think there’s enough here for Judge Dorsey to grant the order enforcing / extending the stay over the Robinhood Shares. Beyond that, there’s enough here to make this a) worth fighting about; and b) not a lopsided fight for either side.

There’s sure to be more to come here. So, for now, we’ll see.

The Onusz Et Al. Adversary Proceeding

The Complaint

On 27 December 2022, a group of plaintiffs filed a complaint / commenced an adversary proceeding against FTX and its former management. (D.I. 321) The complaint is long (63 pages) but is worth a read for those interested, as it presents a detailed (if, obviously, biased) narrative of how we got to where we are today. Instead of putting together a blow-by-blow summary, we’re here going to concern ourselves with what we feel are the highlights.

What’s the point?

The complaint was filed by a group of customers of FTX on behalf of all customers in order to have customer-creditors treated separately from other general unsecured creditors and secured creditors. (¶ 4) In relevant part, the complaint posits that “Cash and assets traceable to customers, which never belonged to FTX or Alameda and do not belong to the estates, should be earmarked solely for customers, and victimized customers should likewise have priority to any other cash possessed or recovered by Debtors. (¶ 4)

To boil everything down, the essential issue here is whether cash and assets deposited by customers onto FTX in their own accounts remains, in a post-bankruptcy FTX, the individual customers’ property or whether it is property of the estate. (¶ 5) If the court finds the latter to be true, the question is then whether FTX customer-creditors (the proposed “Customer Class”) should have priority for repayment over any non-customer creditor. (¶ 5)

The Highlights
  • Insufficient Regulation. “Whatever the various state regulations provide, the protections afforded by money transmitter laws are particularly inadequate for cryptocurrency exchanges. Most prominently, they involve insufficient protection of customer funds. Exchanges like FTX US and Coinbase that offer brokerage services and liquid marketplaces for trading often store significant customer assets for long periods (in contrast to the short period to transmit such property). Without corresponding protections [sic] these customer funds are at risk.” (¶ 60) “The custody of customer funds is why brokerages and exchanges are typically the domain of significant federal agencies like the SEC and the CFTC, which have far stricter rules around custody of customer property.” (¶ 61)
  • Intentionally Inadequate Internal Controls. “Defendant Bankman-Fried was reportedly dismissive of the idea of increased controls, stating that controls could limit Alameda’s activity and potential profit. According to a former software engineer, Defendant Bankman-Fried ‘didn’t want to feel constrained . . . But as a result we ended up not really knowing how much money we even had.'” (¶ 82)
  • Misleading Statements On Regulatory Protections. “FTX US provided each of its U.S. Customers with ‘FTX US Regulation and Licensure Information.’ That disclosure listed the 40 U.S. states for which FTX US had a money transmitter license, as well as Washington D.C. and Puerto Rico. The disclosure also implied that FTX US had customer protections in place…” (¶ 101)
  • FTX Violated Its Own Customer Agreements. “FTX US also provided each of its U.S. Customers with the ‘FTX.US User Agreement’ – between U.S. customers and West Realm Shires – which made it clear that both cryptocurrency and cash was held exclusively for the benefit of customers and title to any assets remained with the customers…” (¶ 102) “ likewise provided its ‘FTX Terms of Service’ – between non-U.S. Customers and FTX Trading – which also made it clear that the title and ownership of customers’ cryptocurrencies remained with the customers and could not be loaned to FTX Trading (or Alameda)…” (¶ 103)
  • Circumventing Banking Industry Concerns Lead To Missing / Misdirected Funds. “Because regulated banks were cautious about dealing with cryptocurrency companies like the FTX Group, some FTX customers were instructed to make deposits at FTX by wiring the funds to Alameda’s bank accounts at Silvergate Bank (‘Silvergate’). Silvergate, which describes itself as a ‘leading provider of innovative financial infrastructure solutions and services for the growing digital currency industry,’ is among the few Federal Reserve member banks through which customers can ‘on ramp’ funds into crypto exchanges like FTX.” (¶ 106) “These deposits, which Defendant Bankman-Fried has admitted totaled as much as $6 billion, were, according to Defendant Bankman-Fried, not sent to FTX Group accounts and/or were ‘miscounted’ as Alameda funds.” (¶ 108)
  • FTX Used Its Own Token To Artificially Increase Alameda’s Trading Leverage. “The FTX Group’s proprietary token – FTT – likewise rode the wave of the bull market. FTT was trading around $2 per token in March 2020 and reached an all-time high exceeding $85 per coin in September 2021.” (¶ 115) “The FTX Group’s ‘spot margin’ trading feature enabled customers to lend or borrow other customers’ assets. Like yield farming, customers could deposit a cryptocurrency – such as a Bitcoin or FTT token – and lend it to another user and earn yield on it.” (¶ 116) “Alameda, as a ‘customer’ of the FTX Group, took advantage of this feature to ‘borrow’ customer funds using FTT tokens it held as collateral. Even if the FTX Group created more FTT tokens, because these coins never made it onto the open market it would not drive down the coin’s value. As a result, these tokens held their market value, allowing Alameda to borrow against them – essentially receiving free money to trade with.” (¶ 117) “Moreover, the higher FTT traded, the more ‘collateral’ Alameda had to take out loans. According to the SEC, Defendant Ellison, acting at the direction of Defendant Bankman-Fried, purchased FTT tokens ‘on various platforms in order to increase the price of those tokens and inflate the value of Alameda’s collateral, which allowed Alameda to borrow even more money from external lenders at increased risk to the lenders and to FTX’s investors and customers.'” (¶ 118) “Crucially, the FTX Group exempted Alameda from the normal auto-liquidation procedure governing other customers under which FTX Group would automatically sell collateral on losing leveraged trades.” (¶ 119)
  • FTX Transferred Client Assets To Alameda To Cover Its Losses. “Also on November 9, 2022, as Defendant Bankman-Fried scrambled for emergency funding, Defendant Ellison held a meeting with Alameda employees during which she revealed what has now been widely reported: that she and Defendants Bankman-Fried, Wang, and Singh knew FTX customer funds had been improperly used by Alameda.” (¶165) “Similarly, according to a November 10, 2022 affidavit submitted to the Supreme Court of the Bahamas (and submitted to this Court by the Joint Provisional Liquidators of FTX Digital on December 14, 2022), on November 9, 2022, the Executive Director of the Securities Commission of the Bahamas met with the CEO of FTX Digital Markets – Ryan Salame – and certain counsel for the FTX Digital and FTX US, who ‘advised that clients’ assets which may have been held with FTX Digital were transferred to Alameda Research ( ) to cover financial losses of Alameda.’” (¶166) “Mr. Salame also reported ‘that there were only three (3) persons who had the necessary codes (or passwords) to transfer clients’ assets to Alameda in this manner, that is, the founders of FTX namely Sam Bankman-Fried, Nishad Singh and Zixio (Gary) Wang.’” (¶167)


The Ad Hoc Committee Of Non-US Customers Adversary Proceeding

The Complaint

On 28 December 2022, an ad hoc committee of non-US customers of (the “Ad Hoc Committee of Non-US Customers”) filed a complaint / commenced an adversary proceeding against the Debtors. (D.I. 328) The Complaint isn’t as long as the Onusz Complaint, and covers a subset of plaintiffs against a subset of defendants, but ultimately, the arguments and relief sought are substantially similar such that it’s not a great use of our time / efforts here to duplicate a summary of highlights. The Complaint might be worth a read for those specifically interested, but the facts and questions discussed above are largely the focus here as well.

The FTX Bankruptcy Case – Early Proceedings

The First Day Hearing


The following motions were heard at the first day hearing:

1.  Creditor List Motion. (D.I. 9) We’ve discussed this extensively, above.

2.  Critical Vendors Motion. (D.I. 46) This is a motion typically filed to ensure that the wheels keep turning at the Debtors. Businesses rely on vendors to do stuff. Those vendors typically want to be paid. Without them doing stuff, the business would suffer. Post-petition, however, paying people, like vendors, requires Court approval. This motion is being made to secure that approval.

3.  Cash Management Motion. (D.I. 47) We’ve discussed this briefly, above. Post-petition debtors require court approval to do just about anything with respect to property of the estate, e.g., cash. Cash management motions in general seek court approval to manage cashflow as the debtor works through its reorganization. In this case, the Debtors need to take fairly extraordinary steps to fix what is very clearly the stuff of accountants’ nightmares in terms of an entity’s cash management system. So, this motion is more than what’s typical, but in terms of cash management (or lack thereof), this case is anything but typical. For enthusiasts, the Cash Management Motion is worth a read.

4.  NOL Motion. (D.I. 49) This motion deals with the bane of every non-tax lawyer’s existence: you guessed it, tax law. Basically, the Debtors want to take actions to preserve tax assets (i.e., NOLs), and need the Court’s permission to do so. Tax lawyers and tax-curious bankruptcy lawyers may desire to read this motion. Others may not. To each their own.

5. Compensation and Benefits Motion. (D.I. 50) Under the Bankruptcy Code, like with critical vendors, debtors require court permission to pay things like wages and benefits for employees. It’s been stressed by the Debtors in, inter alia, the Ray Declaration (D.I. 24, ¶ 60), that the cooperation and support of FTX’s existing employees will be vital to maximize the value of the Debtors’ estate. In a situation where key information of the Debtors might live on a squirreled-away post-it note, or perhaps on the back of a fast food receipt, we can’t help but agree. While folks might not like the idea of the “patients” being used to run the proverbial “asylum,” the Debtors’ new management and oversight personnel suggest that it would be better than the alternative. We tend to agree.

6. Indemnification and Exculpation Motion. (D.I. 94) We’ve discussed this motion, above.

The Audio Recording

An audio recording of the first day hearing in the FTX bankruptcy case is available here. (D.I. 126)

Summary of Proceedings

The first day hearing was held on 22 November 2022.

The hearing itself was shockingly civil. There were a few issues with the Zoom call, because the call administrator somehow wasn’t able to find the “Mute All” toggle. Good times.

There was a discussion of key facts by the S&C attorneys, which is more or less covered in our above discussion of the Ray Declaration.

Judge Dorsey granted interim relief on the Debtors’ first day motions, with a second day hearing to be held on 11 January 2023.

A hearing on the issues surrounding the sealing / redaction of the Top 50 List and Creditor Matrix will be held on 16 December 2022.

The 14 December Hearing


The following motion was heard at the 14 December Hearing:

1.  JPL Motion To Shorten. (D.I. 199) The JPLs assert that certain data currently in possession of the Debtors is necessary to conduct the JPLs’ court-mandated wind-up of FTX DM. The Debtors have, to date, refused to turn over such data, arguing that the BSC has colluded with SBF to segregate the assets of Bahamian customers, in violation of the U.S. Bankruptcy Code. The JPLs argue that at least some of the data is at risk of dissipating, or being deleted, and so it is necessary to consider the JPL Stay Relief Motion on an expedited basis. The JPLs have therefore filed the JPL Motion To Shorten, in order to shorten the notice and objection period with respect to the JPL Stay Relief Motion.

How To Attend

Date & Time

The 14 December hearing was held at 11:00 AM Eastern Time on Wednesday, 14 December 2022.

Attend Live

The hearing was held at The United States Bankruptcy Court for the District of Delaware, located at 824 N. Market Street, 5th Floor, Courtroom No. 5, Wilmington, Delaware 19801. Please note that space in the courtroom, and in any overflow room or rooms (as applicable), is typically very limited. 

Attend via Zoom

Participants may attend the hearing via Zoom. Registration for Zoom participation is required.

The Zoom Registration Link for this hearing is accessible here.

Using the link noted above, participants must follow the Hearing Registration procedures detailed here. Once a participant has completed the registration process, access details will be e-mailed to the participant at the e-mail address the participant indicated during registration.

Please note, we will not be providing actual access details, for which participants must follow the Hearing Registration procedures as noted above. 

Listen via Livestream

Members of the public and media may also listen-in live (audio only) via a YouTube livestream, accessible here.

The Audio Recording

An audio recording of the 14 December hearing in the FTX bankruptcy case is available here. (D.I. 227)

Summary of Proceedings

The JPL Motion To Shorten

Judge Dorsey opened the hearing with a question, to the Debtors and generally, as to whether there would be any objection to the JPL Motion To Shorten. Counsel for the Debtors answered in the affirmative. The Debtors stated that, because of the serious likelihood that the BSC colluded with SBF to remove assets from the Debtors’ estate and into the custody of the BSC, the Debtors and non-Bahamian creditors could be harmed in the event that the data is used to remove further assets. The Debtors stated that it was not certain whether, if information (not just dynamic access, but even cloned databases) was turned over to the JPLs, that the JPLs would be able to maintain it confidentially, including to the exclusion of the Bahamian government (e.g., the BSC).

The Court implored the parties to keep discussing, potentially with the assistance of a mediator, to see if some sort of order similar to one under a Rule 502 Motion would suffice for the purposes of sharing information with the JPLs on the condition that it not be further shared. To us, for the Debtors and the JPLs to come to a mutual agreement on this is unlikely.

Ultimately, because the parties could not reach an agreement on this motion, the Court will conduct a full evidentiary hearing on the JPLs’ Stay Relief Motion (D.I. 197), to be conducted on 6 January 2023 at 9:30 AM Eastern Time.

The Creditor Matrix Motion

The Creditor Matrix Motion was scheduled to be heard at the hearing on 16 December 2022. However, as of 14 December 2022, the UST has yet to form an Official Committee of Unsecured Creditors (“creditors committee” or “OCUC”). The UST mentioned that they had been in communication with creditors, that creditors from around the world had responded, that creditor responses were robust, and that the UST was confident that an OCUC would be formed by the beginning of January. Upon its formation, the OCUC would appoint counsel, and such counsel would represent the OCUC’s interests in the hearing on the Creditor Matrix Motion.

The UST indicated that it might be possible for the OCUC to be formed and have selected counsel as early as Thursday, 15 December 2022, however, that nevertheless leaves insufficient time in which to be prepared to argue at the hearing originally scheduled for Friday.

Consequently, the Creditor Matrix Motion (D.I. 45) and the UST’s Objection to the same (D.I. 200), as well as the Media Intervenors’ Motion to Intervene (D.I. 196) will now be heard at the second day hearing on 11 January 2022 at 9:00 AM Eastern Time. Note that the second day hearing will now begin 1 hour earlier than originally scheduled.

The Debtors mentioned that they will call at least one declarant, who will likewise be subject to cross-examination, at the hearing.

The Indemnification and Exculpation Motion

The Debtors indicated at the hearing that they will consent to the unsealing of the Indemnification and Exculpation Motion.

The Court will conduct a hearing on the Indemnification and Exculpation Motion (D.I. 94) on 11 January 2023, at 9:00 AM Eastern Time.

The JPL Motion to Dismiss

Counsel for the JPLs and and the Debtors will discuss to find a mutually agreeable date on which the JPL Motion to Dismiss (D.I. 213) can be heard.

The 16 December Hearing

The 16 December Hearing will now include a status conference on the parties’ progress with respect to the JPL Stay Relief Motion (D.I. 197).

Debtors’ counsel indicated that the Debtors are open to a mediation with the JPLs, but that prior to any such meditation, the Debtors and their counsel would like to meet with the JPLs and their counsel, and with such meeting to also include the BSC and their US counsel. Counsel for the BSC indicated that they would take the Debtors’ request for a meeting with the Debtors and the JPLs to their client for review, and that he would encourage his clients to participate. 

The 16 December Hearing


An amended Agenda was filed to the docket on 15 December 2022. (D.I. 232)

1.  The Miami Naming Rights Motion (D.I. 135) has been adjourned to the second day hearing, taking place on 11 January 2023 at 9:00 AM Eastern Time.

2.  The Creditor Matrix Motion (D.I. 45) has been adjourned to the second day hearing, taking place on 11 January 2023 at 9:00 AM Eastern Time.

3.  The Indemnification and Exculpation Motion (D.I. 95) will go forward. The Debtors are not seeking continued sealing of the Motion and Interim Order on a final basis.

4.  The Debtors’ Motion to Assume and Enter Into the Custodial Services Agreement (D.I. 156) has been adjourned to the second day hearing, taking place on 11 January 2023 at 9:00 AM Eastern Time.

5.  The Media Intervenors’ Motion (D.I. 196will go forward. Objections to the motion are due at the hearing.

6.  The JPL Stay Relief Motion (D.I. 197will go forward as a status conference.

How To Attend

Date & Time

The 16 December hearing will be held at 10:00 AM Eastern Time on Friday, 16 December 2022.

Attend Live

The hearing will be held at The United States Bankruptcy Court for the District of Delaware, located at 824 N. Market Street, 5th Floor, Courtroom No. 5, Wilmington, Delaware 19801. Please note that space in the courtroom, and in any overflow room or rooms (as applicable), is typically very limited. 

Attend via Zoom

Participants may attend the hearing via Zoom. Registration for Zoom participation is required.

The Zoom Registration Link for this hearing is accessible here.

Using the link noted above, participants must follow the Hearing Registration procedures detailed here. Once a participant has completed the registration process, access details will be e-mailed to the participant at the e-mail address the participant indicated during registration.

Please note, we will not be providing actual access details, for which participants must follow the Hearing Registration procedures as noted above. 

Listen via Livestream

Members of the public and media may also listen-in live (audio only) via a YouTube livestream, accessible here.

The Audio Recording

An audio recording of the 16 December hearing in the FTX bankruptcy case is available here. (D.I. 236)

Summary of Proceedings

Regarding the sealing of the Indemnification and Exculpation Motion, the Debtors are not requesting further sealing, and request that the Court remove the sealing at this time. Court enters the relevant order.

Regarding the Media Intervenors’ motion, Debtors do not object to the intervention of the Media Intervenors solely in order to object to the sealing of the creditor identities. Form of order to be uploaded and will be entered.

The motion on the sealing of creditors information is discussed above, and will be heard at a later date.

Committee expects to appoint counsel either Monday or Tuesday.

Regarding the status conference on the stay relief matter between the Debtors and the JPLs / BSC, the parties and their counsel met in New York on 15 December. Nothing has been agreed to yet, but the Debtors are presently reviewing a proposal by the JPLs. Debtors want to hold the 6 Jan hearing date but are working through the holidays to resolve the issue prior to then. 

From the JPLs perspective, they believe their proposal is comprehensive with respect to the issues, and further state that this specific issue is of critical importance to their clients’ ability to oversee the liquidation of FTX DM.

Judge Dorsey asks if the briefing is complete on the matter. Debtors’ counsel (Bromley) has filed an objection to the JPLs Motion to Shorten, and not to the Motion to Compel.

Our clarifying note: basically, the JPLs have said two things: 1) we need access to the data (Motion to Compel); and 2) we need that access ASAP (Motion to Shorten). Debtors objected to the shorten aspect, but in that objection, laid the groundwork for an objection to the compel aspect itself, without it being, in and of itself, an objection to the Motion to Compel. Because this issue has dragged on, with an evidentiary hearing being set for the 6th of Jan if the parties can’t come to an agreement on the issues beforehand, functionally speaking, the shorten aspect has gone in favor of the Debtors.

Counsel for the JPLs clarifies that the JPLs, at this point, are only seeking static access, without prejudice to maybe seeking live access at some later point.

Our note: On one hand, not providing static access (e.g., PDFs of statements, etc.) is sort of a bad look on the Debtors. On the other hand, looking for live access to the Debtors’ overall systems (including for entities that are not under liquidation by the JPLs (because systems were shared / commingled)) is an absolutely ludicrous non-starter. There’s a reasonable path forward here. It’s just a matter of whether the attorneys and their clients can get there without the Court’s help.

The Debtors want to file their response to the Motion to Compel on the 4th, which is 2 days prior to the hearing on the 6th. Court notes that this does not give JPLs’ counsel much time to review and file a reply, if they choose to do so. Judge Dorsey instructed Debtors’ counsel to file their response by the 30th, making any response by the JPLs due by the 4th, with the hearing being set for the 6th.

The 30th will also be the date for the exchange of witness names, factual stipulations and exhibits.

There was also some back and forth regarding the recognition hearing with respect to the chapter 15 case, which we’ve updated to that section of The FTX Files.

The 341 Meeting


While it may be true that “nobody expects the Spanish Inquisition,” chapter 11 Debtors (or at the very least, their counsel) should expect a 341 Meeting.

In the context of a chapter 11 case, a “341 Meeting” (held pursuant to the requirements of Code §341(a)) is a meeting of creditors convened by the U.S. Trustee. The purpose of the 341 Meeting is to give the Trustee and creditors in the case the opportunity to as questions of the debtor concerning, e.g., the debtor’s conduct, assets, property, liabilities, financial condition, and other matters related to the administration of the case.

It is important to note that creditors are not required to attend, nor does their attendance or non-attendance affect their ability to file a claim or the allowance or disallowance of any such claim.

Short of the use of means typically associated with the (real) Spanish Inquisition, we expect this 341 Meeting to be *particularly* spicy.

How To Attend

On 28 November 2022, the U.S. Trustee’s Office filed a Notice of Telephonic Section 341 Meeting (D.I. 161).

The meeting will be held telephonically, and we are under the present impression that there will be no physical location at which to attend.

To attend, at or just prior to 10:00 AM Eastern Time on Tuesday, 20 December 2022, attendees are instructed to dial-in to +1 888 790 3561 and enter the passcode 7861992#. A full set of access instructions is available here.

The Audio Recording

We will post a link to the audio recording of the meeting here once it has become available.

Summary of Meeting

We live-tweeted the 341 Meeting, with the unrolled thread being accessible via Threadreader here. It is also accessible directly on Twitter, starting here.

Note: We did this live, and errors are to be expected. Twitter being Twitter, we can’t go in and make edits or publish corrections inline without disrupting the thread. Such is life. We’ll address material points from the 341 Meeting (inclusive of any corrections / updates, as applicable) below, and we do apologize for any issues with the actual live Tweets. If there’s something that bears correcting but isn’t discussed below, please feel free to e-mail us about it.

So, let’s dive into it.

In a chapter 11 case, Debtors typically file, shortly after the petition, schedules of assets and liabilities. Here, they have not yet done so, even though the petitions were filed on 11 and 14 November, 2022. If you’re not familiar with this case, that might be a reasonable question. However, recall Ray’s repeated statements, both in filings with the Court and in his comments to Congress, these Debtors are different, and that’s putting it mildly. The books and records, we can only imagine, are an absolute mess. We’ll revisit this issue below. It’s a truly unenviable job, having to put together orderly schedules out of what is probably a pile of Slack printouts, random Google docs, and maybe some post-its? Debtors indicated that they are targeting 15 April 2023 for schedules to be filed. That’s 5 months post-petition. 5 months! There’s an uncharitable view that maybe this is the Debtors and their professionals being incompetent or messing around, but there is zero evidence to think that way, and moreover, from what we know of the folks involved, that is not how they operate. To us, and again, this is our view, what we feel is the correct takeaway here is that this is a reflection of just what a godawful mess the Debtors books and records were. Still, a 341 Meeting typically occurs after schedules have been filed, and so this 341 Meeting is going to be an ongoing series of meetings being adjourned in finality no earlier than after a post-schedule-filing meeting has taken place. From now, we can expect at least one more 341 Meeting date between now and when schedules come out, and another post-schedules.

There was a lot of back and forth about retentions, signatures, etc. We’ll cover these at a high level:

1.  Alvarez & Marsal’s EL with the Debtors was signed by a Debtor employee, Tim Wilson. Tim is still an employee, working with the Debtors, and is, per our research, the GC of FTX Ventures. He came on in that capacity in August of 2022. August. Of. 2022. Yikes.

2.  UST had an issue with the typed signatures of Ray on the petitions. This is sort of a weird point. Do we really need to drag him in here to say on the record that yes, he did authorize counsel to sign in that manner on each of the petitions? We would be shocked if Ray comes in and disavows any of his signatures on the petitions. But anyway.

3. Further on in the Meeting but relevant to this area of discussion is S&C’s forthcoming retention application, with an accounting of any and all of S&C’s prior representation of any of the Debtors. S&C represented the Debtors in at least one transaction prior to the filing of the petitions, that being the bid to acquire assets out of the Voyager bankruptcy over the summer. That engagement was led by Andrew Dietderich, who is also assisting James Bromley in representation of the Debtors here. We’ll leave the legal ethics to the legal ethics people. Our big question here is, having worked on acquisitions in the past, how could the professionals have had ostensibly so little clue as to the inner workings of their client?

Moving on, there was a weird little moment here when it was brought up that, conceivably, Debtors could sell an asset prior to schedules being filed. That seems…wrong, right? Right, sort of. The core principle, to us, is getting maximal value of the asset in the sale, as proceeds will go to benefit creditors. But figuring out that valuation (e.g., of the FTX Japan business, or the FTX Europe business, etc.) doesn’t depend on the Debtors’ full scope of assets & liabilities, particularly when, in the two mentioned examples, the entities being sold are actually solvent. It’s just a regular valuation exercise and sale process: determine the best bid, hit it, and bring the money back in to the estate. The Debtors will probably have some more answering to do here, but this shouldn’t be an issue. For us, the main concern would be to get these things sold before the crypto space becomes much more difficult to operate in. And we think that’s coming in 2023.

One of the other big takeaways here is just how ridiculous and horrible the pre-petition Debtors’ cash management system was. A month or so into the case, the Debtors are still trying to figure out where their cash is, in what accounts, at what banks, in what countries, with whose signature authority required, etc. And of course, different policies / laws apply in different countries regarding the Debtors gaining access to and control over those accounts. So, it’s a mess, and it’s going to take a while, and considerable resources, to clean it up.

There’s also apparently a lot of cash held in bank accounts in Japan. We wonder if that’s in USD or JPY-denominated accounts. Because, you know, there’s a bit of an FX situation going on in USD-JPY. We’d said in the livetweeting that we’d hope in USD-denominated, but right around then was when the BOJ announced its loosening of its yield curve control policy, sending USD-JPY tumbling.

In what’s maybe some good news, the Debtors do keep discovering more and more cash. But the fact that this is happening, and in significant sums, leads us to believe that the pre-petition Debtors’ cash management system was something of an easter egg hunt, with SBF & co. being the proverbial easter bunny, hiding eggs in various corners of the globe. Needless to say, this is not how we’d advise one to run a business. Given this, also, it’s becoming increasingly clear that while a short-term liquidity facility could have staved off the insolvency-producing circumstances that led to these petitions being filed, these easter eggs would have inevitably “hatched,” with the proverbial “chickens” coming home to roost. There’s no way, in our minds, that FTX could have gone on and prospered as a company. Their lack of systems would always have been a latent death sentence.

In other revelations, the pre-petition Debtors didn’t have a central DMS (document management system) in place, but rather, were storing things like customer agreements in various random places, including, inter alia, Slack. Seriously, Slack. We tagged Slack in a tweet asking whether they think their platform is an appropriate place to store things like key legal documents. They haven’t responded. We’ll try to offer a response: no. Slack is a communication tool. Sure, there might be storage functions available, but Slack is not intended to replace a DMS, and certainly not at a financial services company.

An interesting point came up re: release of information. Customers are going to need account statements in order to include them in their tax filings. The Debtors are working on a system to make that possible, as, at least right now, customers are locked out of their account information. This also calls to mind issues about tax treatment of assets frozen in a bankruptcy, or lost (and if lost, whether by criminal or non-criminal conduct). We’re not tax professionals, but we’ll save this as a note to discuss with some folks who are, perhaps on a forthcoming podcast episode.

Another thing for a future podcast episode that came up at today’s meeting: how will customer NFTs held at FTX be treated / returned? We’ll circle back to this later.

The above are more or less the highlights of this 341 Meeting. As mentioned, there will be other iterations, so stay tuned.

The JPL Stay Relief Hearing


The Court will conduct an evidentiary hearing regarding the JPL Stay Relief Motion (D.I. 197).

How To Attend

Date & Time

The JPL Stay Relief Hearing will be held at 9:30 AM Eastern Time on Friday, 6 January 2023.

Attend Live

The hearing will be held at The United States Bankruptcy Court for the District of Delaware, located at 824 N. Market Street, 5th Floor, Courtroom No. 5, Wilmington, Delaware 19801. Please note that space in the courtroom, and in any overflow room or rooms (as applicable), is typically very limited. 

Attend via Zoom

Participants may also attend the hearing via Zoom. Registration for Zoom participation is required. Prior to the hearing (typically the day prior), an Agenda containing the Zoom registration link will be filed on the docket. Using the link contained in the Agenda, participants must follow the Hearing Registration procedures detailed here. Once a participant has completed the registration process, access details will be e-mailed to the participant at the e-mail address the participant indicated during registration.

Once the Agenda for this hearing has been filed to the docket, we will update this section with the applicable Zoom registration link. For the avoidance of doubt, we will not be providing actual access details, for which participants must follow the Hearing Registration procedures as noted above. 

Listen via Livestream

Members of the public and media may also listen-in live (audio only) via a YouTube livestream, accessible here.

The Second Day Hearing


The Creditor List Motion (D.I. 9), Critical Vendors Motion (D.I. 46), Cash Management Motion (D.I. 47), NOL Motion (D.I. 49), Compensation and Benefits Motion (D.I. 50), and Indemnification and Exculpation Motion (D.I. 94) are scheduled for hearing on final relief at the second day hearing. We’ve briefly discussed each of these, above.

Additionally, the Schedules and Statements Deadline Extension Motion filed by the Debtors on 17 November 2022 (D.I. 26) will also be heard.

The Creditor Matrix Motion (D.I. 45) and the UST’s Objection to the same (D.I. 200), as well as the Media Intervenors’ Motion to Intervene (D.I. 196) will also be heard at the second day hearing. These were set to be heard at a hearing on 16 December 2022, however, given the (reasonable) delays in forming an OCUC, and therefore likewise appointing counsel for the OCUC, a hearing on the original date would have been too soon to give the OCUC a meaningful, if any, chance to participate.

The Indemnification and Exculpation Motion (D.I. 94) will also be heard at the second day hearing. Previously filing this motion under seal, the Debtors, pursuant to their statements made at the 14 December Hearing, have consented to the removal of such protections from the motion.

How To Attend

Date & Time

The second day hearing will be held at 9:00 AM Eastern Time on Wednesday, 11 January 2023.

Attend Live

The hearing will be held at The United States Bankruptcy Court for the District of Delaware, located at 824 N. Market Street, 5th Floor, Courtroom No. 5, Wilmington, Delaware 19801. Please note that space in the courtroom, and in any overflow room or rooms (as applicable), is typically very limited. 

Attend via Zoom

Participants may also attend the hearing via Zoom. Registration for Zoom participation is required. Prior to the hearing (typically the day prior), an Agenda containing the Zoom registration link will be filed on the docket. Using the link contained in the Agenda, participants must follow the Hearing Registration procedures detailed here. Once a participant has completed the registration process, access details will be e-mailed to the participant at the e-mail address the participant indicated during registration.

Once the Agenda for this hearing has been filed to the docket, we will update this section with the applicable Zoom registration link. For the avoidance of doubt, we will not be providing actual access details, for which participants must follow the Hearing Registration procedures as noted above. 

Listen via Livestream

Members of the public and media may also listen-in live (audio only) via a YouTube livestream, accessible here.

Media Coverage Roundup

Antics & Admissions

Hablando con Caroline Ellison: CEO Alameda Research, Matemática y TraderEl Momento Podcast, 25 May 2022.

Sam Bankman-Fried quietly deletes his claim that FTX customer funds are safe. Christiaan Hetzner for Fortune, 9 November 2022.

This Strongly Appears To Be Alameda CEO Caroline Ellison’s Tumblr Account. Noor Al-Sibai for Futurism, 14 November 2022.

How World Economic Forum, others are hiding their past ties with FTX. Ariel Zilber, Thomas Barrabi and Lydia Moynihan for The New York Post, 14 November 2022.

Disgraced crypto CEO Caroline Ellison tweeted about ‘regular amphetamine use’ in 2021. Thomas Barrabi for The New York Post, 15 November 2022.

Sam Bankman-Fried tries to explain himself. Kelsey Piper for Vox, 16 November 2022.

Disgraced FTX founder Sam Bankman-Fried still sees path to rebuilding his bankrupt empire and believes he can make his customers whole. Christiaan Hetzner for Fortune, 16 November 2022.

Sam Bankman-Fried’s Lawyers Quit Because Of His “Incessant And Disruptive Tweeting”. Noor Al-Sibai for Futurism, 21 November 2022.

Sam Bankman-Fried’s First Interview After FTX Collapse. Tiffany Fong, 29 November 2022.

SBF Says His Lawyers Can “Go F*ck Themselves”. Noor Al-Sibai for Futurism, 30 November 2022.

Sam Bankman-Fried Interviewed Live About the Collapse of FTXThe New York Times, 30 November 2022.

FTX founder Sam Bankman-Fried denies ‘improper use’ of customer fundsGood Morning America, 1 December 2022.

Alameda CEO Caroline Ellison Joked About Putting “Wire Fraud” On Her Dating Profile. Noor Al-Sibai for Futurism, 8 December 2022.

SBF secretly funded crypto news site. Sara Fischer for Axios, 9 December 2022.

The Full Testimony Bankman-Fried Planned To Give To Congress. Steven Ehrlich for Forbes, 13 December 2022.

FTX’s inner circle had a secret chat group called ‘Wirefraud’. Matthew Cranston for The Australian Financial Review, 13 December 2022.

Hours before his arrest, SBF denied being part of ‘Wirefraud’ chat group. Jesse Coghlan for Cointelegraph, 13 December 2022.

SBF’s Dad Kept Sticking His Fingers in Ears During Court Hearing. Maggie Harrison for Futurism, 15 December 2022.

Pre-Petition FTX

Tom Brady and Gisele Bündchen partner up with crypto firm FTX. Vildana Hajric and Bloomberg for Fortune, 29 June 2021.

Gisele Bündchen and Sam Bankman-Fried hope to sell you on crypto’s potential for good in Vogue’s FTX ads. Connie Lin for FastCompany, 28 April 2022.

FTX’s Sam Bankman-Fried backs down from ‘dumb quote’ about giving $1 billion to political races. MacKenzie Sigalos for CNBC, 14 October 2022.

Divisions in Sam Bankman-Fried’s Crypto Empire Blur on His Trading Titan Alameda’s Balance Sheet. Ian Allison for CoinDesk, 2 November 2022.

FTX’s Bankman-Fried Quietly Invested More than $500 Million in Sequoia and Other VCs. Kate Clark for The Information, 10 November 2022.

The COO at FTX is an ex-Credit Suisse analyst in Singapore. Sara Butcher for eFinancialCareers, 10 November 2022.

Silicon Valley Poured Money Into FTX, With Few Strings Attached. Eliot Brown, Peter Rudegeair and Berber Jin for The Wall Street Journal, 10 November 2022.

Sam Bankman-Fried’s Alameda quietly used FTX customer funds for trading, say sources. Paige Tortorelli and Kate Rooney for CNBC, 13 November 2022.

At least $1 billion of client funds missing at failed crypto firm FTX. Angus Berwick for Reuters, 13 November 2022.

The Risky Business of Sam Bankman-Fried. Ben Cohen for The Wall Street Journal, 14 November 2022.

How Sam Bankman-Fried’s Crypto Empire Collapsed. David Yaffe-Bellany for The New York Times, 14 November 2022.

Sam Bankman-Fried’s Magic Money Box Enriched Vast Crypto Network. Annie Massa for Bloomberg, 14 November 2022.

Visualized: FTX’s Leaked Balance Sheet. Niccolo Conte and Joyce Ma for Visual Capitalist, 15 November 2022.

FTX’s In-House Performance Coach Is Just as Surprised as You Are. Kevin Roose for The New York Times, 15 November 2022.

The Curious Case of FTX’s ‘Company Therapist’. Maxwell Strachan for Vice, 15 November 2022.

FTX’s Bankman-Fried begged for a rescue even as he revealed huge holes in firm’s books. Angus Berwick, Anirban Sen, Elizabeth Howcroft and Lawrence Delevingne for Reuters, 16 November 2022.

Watch FTX CEO’s Entire Testimony to Congress in December 2021CNET Highlights, 18 November 2022.

How FTX bought its way to become the ‘most regulated’ crypto exchange. Chris Prentice, Angus Berwick and Hannah Lang for Reuters, 18 November 2022.

FTX’s Sam Bankman-Fried cashed out $300M after fundraising round: report. Thomas Barrabi for The New York Post, 18 November 2022.

Bill Clinton silent on Bahamas event with disgraced crypto boss Sam Bankman-Fried months before collapse. Joe Schoffstall for FOXBusiness, 18 November 2022.

FTX’s ‘chief regulatory officer’ Dan Friedberg tied to online poker scandal. Thomas Barrabi for The New York Post, 20 November 2022.

Inside Sam Bankman-Fried’s Quest to Win Friends and Influence People. Kenneth P. Vogel, Emily Flitter and David Yaffe-Bellany for The New York Times, 22 November 2022.

Bankman-Fried’s FTX, senior staff, parents bought Bahamas property worth $300 million. Koh Gui Qing for Reuters, 22 November 2022.

Crypto Firm FTX’s Ownership of a U.S. Bank Raises Questions. Stephen Gandel for The New York Times, 23 November 2022.

She Was a Little-Known Crypto Trader. Then FTX Collapsed. David Yaffe-Bellany, Lora Kelley and Cade Metz for The New York Times, 23 November 2022.

Shark Tank’s Kevin O’Leary, an FTX spokesperson, explains his next move after the crypto collapse and how he tried to rescue Sam Bankman-Fried. Phil Rosen for Business Insider, 27 November 2022.

‘No Cooperation’: How Sam Bankman-Fried Tried to Cling to FTX. David Yaffe-Bellany for The New York Times, 29 November 2022.

The Messy Real-Estate Fallout From FTX’s Implosion.  Staff at Curbed, 29 November 2022.

Alameda bought this obscure OTC desk to handle FTX banking. Staff at Protos, 30 November 2022.

Inside FTX’s wild spending: All-expense trips, packages by private jets and free massages. Thomas Barrabi for The New York Post, 30 November 2022.

Sam Bankman-Fried said parents’ $16.4M Bahamas house was meant for FTX staff. Ariel Zilber for The New York Post, 1 December 2022.

Sam Bankman-Fried says he ‘misaccounted’ $8 billion after FTX customers wired money to hedge fund Alameda and the cash was counted twice. Pete Syme for Business Insider, 2 December 2022.

Crypto ‘smart’ money? Big traders fell for Sam Bankman-Fried. Charles Gasparino for The New York Post, 3 December 2022.

Revealed: the Alameda venture capital portfolio. Kadhim Shubber and Bryce Elder for The Financial Times, 6 December 2022.

Sam Bankman-Fried lobbied for Taylor Swift deal as FTX bled cash and execs urged restraint. Kate Rooney and Paige Tortorelli for CNBC, 7 December 2022.

Sam Bankman-Fried is reportedly such a huge Taylor Swift fan that he pushed for FTX to sponsor her tour in a $100 million deal that almost happened. Britney Nguyen for Business Insider, 7 December 2022.

It turns out Taylor Swift has better due diligence than half of Silicon Valley. Dan DeFrancesco for Business Insider, 8 December 2022.

The Parents in the Middle of FTX’s Collapse. David Yaffe-Bellany, Lora Kelley and Kenneth P. Vogel for The New York Times, 12 December 2022.

Binance ‘put FTX out of business’ — Kevin O’Leary. Ana Paula Pereira for Cointelegraph, 14 December 2022.

FTX Executives Used ‘Korea’ Account to Mask Giant Alameda Liabilities. Gillian Tan and Annie Massa for Bloomberg, 14 December 2022.

FTX’s New CEO Says Company Did “Old Fashioned Embezzlement”. Victor Tangermann for Futurism, 14 December 2022.

Alameda tried to redeem 3,000 wBTC days before bankruptcy: BitGo CEO. Brayden Lindrea for Cointelegraph, 15 December 2022.

Mysterious GitHub account in name of ex-FTX executive ‘authored code that HID Alameda Research’s ballooning debts’ – as expert says Sam Bankman-Fried’s ex-girlfriend likely helped DOJ. Sophie Mann for The Daily Mail, 15 December 2022.

A Traditional Exchange? FTX Was Anything But. Joe Rennison for The New York Times, 16 December 2022.

Restaurateur, Political Donor, Tipster: The Many Roles of FTX’s Ryan Salame. Matthew Goldstein, Kenneth P. Vogel and David Yaffe-Bellany for The New York Times, 17 December 2022.

Post-Petition FTX

Does FTX’s New CEO Have the Worst Job in Corporate America?. Ben Cohen for The Wall Street Journal, 15 December 2022.

FTX Looks to Sullivan & Cromwell Veteran Team to Untangle Mess. Justin Wise for Bloomberg Law, 15 November 2022.

TSM suspends $210 million naming rights deal after FTX woes, rocky year. Mikhail Klimentov for The Washington Post, 16 November 2022.

A new bankruptcy filing shows the value of FTX’s crypto holdings is just $659,000, after Sam Bankman-Fried said they were worth $5.5 billion. Matthew Fox for Business Insider, 17 November 2022.

Bankrupt FTX Fires Three of Sam Bankman-Fried’s Top Deputies. Justin Baer for The Wall Street Journal, 18 November 2022.

Miami-Dade County, stuck in a 19-year contract with FTX, seeks to rename its arena. Emma Bowman and Greg Allen for NPR, 24 November 2022.

For FTX customers, IRS Ponzi rules loom large. Ernie Sadashige for FOXBusiness, 8 December 2022.

Testimony of Mr. John J. Ray III, CEO, FTX DebtorsHouse Financial Services Committee, 13 December 2022.

Investigating the Collapse of FTX, Part IU.S. House Committee on Financial Services, 13 December 2022.

Genesis Unit Is Among Crypto Firms Named to FTX Creditors Committee. Steven Church and Emily Nicolle for Bloomberg Law, 15 December 2022.

FTX Debtors Announce Process for Voluntary Return of Avoidable PaymentsFTX, 19 December 2022.

Why This Is No Madoff Moment for FTX Creditors. Andrew Ross Sorkin, Ravi Mattu, Bernhard Warner, Sarah Kessler, Stephen Gandel, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni for The New York Times, 20 December 2022.

FTX Creditors Committee Taps Paul Hastings to Lead Legal Work. Roy Strom for Bloomberg Law, 21 December 2022.

Criminal Investigations & Prosecutions

Could Sam Bankman-Fried go to prison for the FTX disaster?. Jeff John Roberts for Fortune, 13 November 2022.

Paul Weiss Drops Ex-FTX CEO Bankman-Fried on Conflicts. Justin Wise for Bloomberg Law, 18 November 2022.

FTX under ‘active’ civil and criminal investigation: Bahamas AG. Stephen Katte for Cointelegraph, 28 November 2022.

Photos on Twitter appear to show Caroline Ellison in New York City, prompting speculation of FTX-linked plea deal. Marco Quiroz-Gutierrez for Fortune, 5 December 2022.

Sam Bankman-Fried Hires Lawyer Who Defended Ghislaine Maxwell. Noor Al-Sibai for Futurism, 7 December 2022.

Campaign finance complaint filed against Sam Bankman-Fried. Staff at Citizens for Responsibility and Ethics in Washington, 8 December 2022.

FEC probe demanded after SBF ‘admitted’ making dark money donations. Luke Huigsloot for Cointelegraph, 9 December 2022.

FTX’s Sam Bankman-Fried Is Arrested in the Bahamas. David Yaffe-Bellany, William K. Rashbaum, and Matthew Goldstein for The New York Times, 12 December 2022.

Caroline Ellison hires lawyer as US reportedly weighs fraud case against Sam Bankman-Fried. Ariel Zilber for The New York Post, 12 December 2022.

SBF denied bail by Bahamas Magistrate Court judge. Zhiyuan Sun for Cointelegraph, 13 December 2022.

Read the Criminal Indictment Against Sam Bankman-Fried. Matthew Goldstein for The New York Times, 13 December 2022.

Prosecutors Say FTX Was Engaged in a ‘Massive, Yearslong Fraud’. David Yaffe-Bellany, Matthew Goldstein and Emily Flitter for The New York Times, 13 December 2022.

US attorney says ‘we are not done’ charging individuals for FTX collapse. Jacquelyn Melinek for TechCrunch, 13 December 2022.

FTX’s Other Ex-Billionaires Lie Low After Sam Bankman-Fried’s Arrest. Amanda Albright for Bloomberg, 13 December 2022.

Sam Bankman-Fried’s Bahamas jail infested by rats and maggots: ‘Not fit for humanity’. Lee Brown for The New York Post, 14 December 2022.

SBF renews bid for bail. Travis Cartwright-Carroll for The Nassau Guardian, 16 December 2022. 

Sam Bankman-Fried to reverse decision on contesting extradition. Jasper Ward for Reuters, 17 December 2022.

Sam Bankman-Fried Is Expected to Agree to Extradition to the U.S.. David Yaffe-Bellany, Rob Copeland and Matthew Goldstein for The New York Times, 17 December 2022.

Sam Bankman-Fried prosecutors target top Democrats for info on FTX donations. Mary Kay Linge for The New York Post, 17 December 2022.

Plea Agreement Re: United States v. Caroline Ellison, S2 22 Cr. 673 (RA). 18 December 2022.

FTX’s Bankman-Fried wants more information before agreeing to U.S. extradition. Jared Higgs, Luc Cohen and Jasper Ward for Reuters, 19 December 2022.

SBF appears in court again. Staff at The Nassau Guardian, 19 December 2022.

Sam Bankman-Fried Signs US Extradition Papers in Bahamas, Official Says. Katanga Johnson for Bloomberg, 20 December 2022.

The FTX Collapse and the Risks of Crypto Corruption. Micah Rosen for The Global Anticorruption Blog, 20 December 2022.

Sam Bankman-Fried Said to Be in Talks With Prosecutors Over Bail Deal. David Yaffe-Bellany, William K. Rashbaum, Matthew Goldstein and Benjamin Weiser for The New York Times, 20 December 2022.

Sam Bankman-Fried’s Bahamas Jail Luxury: Cable, AC and a Toilet. Katanga Johnson for Bloomberg, 21 December 2022.

FTX founder Sam Bankman-Fried will fly to New York after days of courtroom chaos. MacKenzie Sigalos for CNBC, 21 December 2022.

Two Executives in Sam Bankman-Fried’s Crypto Empire Plead Guilty to Fraud. David Yaffe-Bellany, Matthew Goldstein and Benjamin Weiser for The New York Times, 21 December 2022.

FTX’s Gary Wang, Alameda’s Caroline Ellison plead guilty to federal charges, cooperating with prosecutors. MacKenzie Sigalos and Rohan Goswami for CNBC, 21 December 2022.

FTX founder Sam Bankman-Fried to make first NYC court appearance over crypto fraud charges. Elizabeth Rosner and Jesse O’Neill for The New York Post, 22 December 2022.

Sam Bankman-Fried released on $250 million bond after appearing in a US court. Kara Scannell for CNN, 22 December 2022.

Caroline Ellison confesses she ‘knew it was wrong’ to take part in Sam Bankman-Fried’s alleged fraud. Elizabeth Rosner and Bruce Golding for The New York Post, 23 December 2022.

Bankman-Fried’s ‘Blame Ellison’ Defense Undercut by His FTX Co-Founder’s Plea Deal. Ava Benny-Morrison for Bloomberg, 23 December 2022.

Judge Ronnie Abrams recuses self from Sam Bankman-Fried case because husband’s firm advised FTX. Elizabeth Rosner and Patrick Reilly for The New York Post, 23 December 2022.

Regulatory Investigations & Enforcement Actions

FTX Assets Frozen by Bahamian Regulator. Nelson Wang for CoinDesk, 10 November 2022.

Regulators Begin Cracking Down on FTX. Andrew Ross Sorkin, Ravi Mattu, Bernhard Warner, Sarah Kessler, Stephen Gandel, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni for The New York Times, 11 November 2022.

FTX Has European License Suspended by Cyprus Regulator. Oliver Knight for CoinDesk, 11 November 2022.

SEC Chair Gary Gensler ‘in a corner’ as Congress seeks answers over FTX mess. Jeff John Roberts for Fortune, 16 November 2022.

CFTC Has ‘Boots on the Ground’ at FTX Subsidiary LedgerX. Lavender Au for CoinDesk, 17 November 2022.

FTX: Tougher crypto rules needed after collapse, says Bank of England. Joe Tidy for BBC, 21 November 2022.

UAE regulator revokes FTX license amid the exchange’s collapse. Ezra Reguerra for Cointelegraph, 24 November 2022.

Turkish Authorities Order Seizure of ‘Suspicious’ FTX Assets. Sandali Handagama for CoinDesk, 25 November 2022.

FTX Founder Sam Bankman-Fried Is Said to Face Market Manipulation Inquiry. Emily Flitter, David Yaffe-Bellany and Matthew Goldstein for The New York Times, 7 December 2022.

FTX probe has feds wondering if SBF brought down Terra. Staff at Protos, 8 December 2022.

FTX hearing: US lawmakers criticize use of Quickbooks, creepy dough and ‘conscientious stupidity’. Turner Wright for for Cointelegraph, 13 December 2022.

SEC Charges Samuel Bankman-Fried with Defrauding Investors in Crypto Asset Trading Platform FTXSecurities and Exchange Commission, 13 December 2022.

SEC Complaint against Samuel Bankman-FriedSecurities and Exchange Commission, 13 December 2022.

CFTC Charges Sam Bankman-Fried, FTX Trading and Alameda with Fraud and Material MisrepresentationsCommodity Futures Trading Commission, 13 December 2022.

FTX Bahamas co-CEO Ryan Salame blew the whistle on FTX and Sam Bankman-Fried. Jesse Coghlan for Cointelegraph, 15 December 2022.

SBF’s handcuffs aren’t loosening up anytime soon. Jacquelyn Melinek for TechCrunch, 15 December 2022.

US Government Wants to ‘Send a Message’ to Crypto With SBF’s Arrest, Says Former US Prosecutor. Fran Velasquez for CoinDesk, 15 December 2022.

Top FTX Group Executive Tipped Off Bahamas Authorities About Commingling of Funds in November. Eliza Gkritsi for CoinDesk, 15 December 2022.

SEC Charges Caroline Ellison and Gary Wang with Defrauding Investors in Crypto Asset Trading Platform FTX. Securities and Exchange Commission, 21 December 2022.

CFTC Charges Alameda CEO and Alameda and FTX Co-Founder with Fraud in Action Against Sam Bankman-Fried and his CompaniesCommodity Futures Trading Commission, 21 December 2022.

Complaint: FTX Trading, et al.. Commodity Futures Trading Commission, 21 December 2022.

Alameda’s Caroline Ellison and FTX’s Gary Wang hit with additional fraud charges. Brayden Lindrea for Cointelegraph, 22 December 2021. 

Civil Suits

Elsewhere In The Cryptoverse

Founders who ‘cannot be trusted’ and a $50 million yacht: New Three Arrows Capital bankruptcy filing sheds light on the crypto hedge fund’s epic demise. Grady McGregor for Fortune, 19 July 2022.

Are All Crypto Entities Eligible to File for Bankruptcy Under Chapter 11?. Jeffrey L Robins, Alison Hashmall, Elie J. Worenklein, Lily D. Vo, Michael C. Godbe, Ezra Newman and Justice Walters for The Debevoise FinTech Blog, 2 August 2022.

The Fall of Terra: A Timeline of the Meteoric Rise and Crash of UST and LUNA. Krisztian Sandor and Ekin Genç for CoinDesk, 19 August 2022.

Debevoise & Plimpton Discusses How Bankruptcy Courts Will Measure Customer Crypto Claims. Sidney P. Levinson, Jeffrey L. Robins, Elie J. Worenklein and Michael C. Godbe for The CLS Blue Sky Blog, 24 October 2022.

Tom Brady Appears to Be Totally Screwed by the FTX Collapse. Maggie Harrison for Futurism, 11 November 2022.

FTX Implodes, and a Top VC Backer Falls on Its Face. Brad Stone for Bloomberg, 14 November 2022.

FTX Collapse Slaps the Winklevoss Brothers. Ellen Chang for The Street, 16 November 2022.

Crypto firm Multicoin expects contagion from FTX to wipe out many trading firms in coming weeks. Ari Levy and MacKenzie Sigalos for CNBC, 17 November 2022.

Guy Linked to Huge Crypto Meltdown Says It’s Just a Coincidence That He’s Hanging Out in a Country With No Extradition to United States. Maggie Harrison for Futurism, 18 November 2022.

FTX’s downfall casts a shadow over other sports-rights deals. What’s up, Arena?. Ronald D. White for The Los Angeles Times, 18 November 2022.

Three weeks ago Sam Bankman-Fried and Anthony Scaramucci were fundraising together in the Middle East. Now the ‘Mooch’ faces losing SBF’s 30% stake in his SkyBridge hedge fund which is frozen in bankruptcy. Lucy Brewster for Fortune, 21 November 2022.

Keeping Track of Crypto Is Hard. Matt Levine for Bloomberg, 21 November 2022.

The curious case of FTX and Farmington State Bank, aka Moonstone. Staff at Protos, 24 November 2022.

Moonstone Bank explains ties with Alameda Research. Staff at Protos, 25 November 2022.

Bitcoin teeters after Grayscale owner DCB reveals it’s $2bn in debt. Brian McGleenon for Yahoo!Finance, 25 November 2022.

Bitcoin worth $1.5B withdrawn from Coinbase in 48 hours. Zeynep Geylan and James Van Straten for Cryptoslate, 25 November 2022.

Moonstone Bank further explains Gemini and Revolut ties. Staff at Protos, 28 November 2022.

Crypto firm BlockFi files for bankruptcy as FTX fallout spreads. MacKenzie Sigalos and Rohan Goswami for CNBC, 28 November 2022.

The Fed responds to the Moonstone Bank mystery. Staff at Protos, 30 November 2022.

Will Grayscale be the next FTX?. Daniele Servadei for Cointelegraph, 3 December 2022.

Sen. Warren demands answers from Silvergate Bank about its business dealings with FTX. Gretchen Morgenson for NBC News, 6 December 2022.

A Hedge Fund Hit by FTX Collapse Defaults on $36 Million of Debt. Sidhartha Shukla and Emily Nicolle for Bloomberg, 6 December 2022.

U.S. court weighs novel issue of crypto ownership in bankruptcy. Tom Hals and Dietrich Knauth for Reuters, 7 December 2022.

Billionaire Winklevoss Twins’ $900M Disaster Is No Shock. Noah Kirsch for The Daily Beast, 7 December 2022.

How to Recover Assets Lost to Cryptocurrency Theft and Fraud. Robert Appleton and George McEachern for Bloomberg Law, 9 December 2022. CEO has history of red flags including bankruptcy and quick exits. Rohan Goswami and MacKenzie Sigalos for CNBC, 9 December 2022.

Former Employees Say Problems Were Obvious at the Winklevoss’ Exchange Before It Paused Withdrawals. Maggie Harrison for Futurism, 11 December 2022.

Crypto 2023: It’s Sanctions Season. Anna Baydakova for CoinDesk, 12 December 2022.

U.S. Justice Dept is split over charging Binance as crypto world falters. Angus Berwick, Dan Levine and Tom Wilson for Reuters, 12 December 2022.

Testimony of Mr. Kevin O’LearyU.S. Senate Committee on Banking, Housing and Urban Affairs, 14 December 2022.

Sam Bankman-Fried’s Enablers Deserve Scrutiny Too. Max H. Bazerman for Time, 14 December 2022.

Crypto exchange Bitvavo owed up to $300M by Genesis. Staff at Protos, 15 December 2022.

Binance’s native BNB token plunges to lowest since July as concerns mount about withdrawals, FTX ties. Ari Levy for CNBC, 16 December 2022.

Shark Tank investor Kevin O’Leary hits back against Binance CEO calling him a ‘liar’. Jennifer Sor for Business Insider, 16 December 2022.

The FTX Crypto Victim Card Can Be Hard to Play. Lionel Laurent for Bloomberg, 16 December 2022.

Gemini Customer Data Leak Was Advertised for Sale on Hacker Forums for 30 BTC in September. Jamie Redman for, 17 December 2022.

Gemini Forms Creditors Committee With Houlihan Lokey to Resolve Genesis Liquidity Issues. Jamie Redman for, 18 December 2022.

Binance’s books are a black box, filings show, as it tries to rally confidence. Tom Wilson, Angus Berwick and Elizabeth Howcroft for Reuters, 19 December 2022.

Grayscale Will Explore Returning Portion of Investor Capital if SEC Refuses Spot Bitcoin ETF. Oliver Knight for CoinDesk, 19 December 2022.

Binance.US Agrees to Buy Voyager’s Assets for $1.02B. Parikshit Mishra for CoinDesk, 19 December 2022.

BlockFi files motion to return frozen crypto to wallet users. Stephen Katte for Cointelegraph, 20 December 2022.

Celsius amasses 30 potential bidders for its assets, withdrawal motion approved. Luke Huigsloot for Cointelegraph, 20 December 2022.

The Future Of Crypto Regulation

You Get the Crypto Rules You Want. Matt Levine for Bloomberg, 27 January 2022.

All Nations Should Outlaw Tumbling or Mixing Cryptocurrencies. Richard Messick for The Global Anticorruption Blog, 2 February 2022.

Gary Gensler Wants to Regulate Crypto. Matt Levine for Bloomberg, 8 September 2022.

Crypto Wants Some SEC Rules. Matt Levine for Bloomberg, 13 September 2022.

In wake of FTX collapse, New York financial regulator wants its digital asset licensing regime adopted nationally. Jordan Atkins for CoinGeek, 17 November 2022.

Let crypto burn. Stephen Cecchetti and Kim Schoenholtz for The Financial Times, 17 November 2022.

SEC chair Gary Gensler rushing to unveil big changes amid FTX scandal. Charles Gasparino for The New York Post, 26 November 2022.

Blockchains, What Are They Good For?. Paul Krugman for The New York Times, 1 December 2022.

How to Start Regulating the Crypto Markets—Immediately. Jay Clayton and Timothy Massad for The Wall Street Journal, 4 December 2022.

SEC issues new guidance requiring companies to disclose cryptocurrency risks. Chelsey Cox for CNBC, 8 December 2022.

US Financial Stability Oversight Council urges congressional action on crypto. Turner Wright for Cointelegraph, 16 December 2022.

Senate banking chairman says ‘maybe’ to cryptocurrency ban. Brad Dress for The Hill, 18 December 2022.

Regulating Crypto: How we move forward as an industry from here. Brian Armstrong for Coinbase, 19 December 2022.

Retiring U.S. Sen. Pat Toomey Introduces Stablecoin TRUST Act. Ryan Ozawa for Decrypt, 21 December 2022.

Following a string of scandals: where will the crypto industry go in 2023. Eric Johansson for Verdict, 22 December 2022.

Brazilian president signs crypto bill into law. Turner Wright for Cointelegraph, 22 December 2022.

SEC Heightening Scrutiny of Auditors’ Crypto Work. Jean Eaglesham for The Wall Street Journal, 22 December 2022.

Like all other Titan Grey Thought Leadership, “The FTX Files” is presented by Titan Grey subject to certain disclaimers, accessible here.

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