NASSAU, BAHAMAS — FTX.com customers have until August 16th to elect whether they wish to participate in the official liquidation proceedings of FTX Digital Markets or the US Chapter 11 cases. They cannot participate in both.
In an official liquidation election process overview, the Joint Official Liquidators (JOLs) of the Bahamian subsidiary of FTX Trading Ltd, owner and operator of FTX Bahamas-based FTX Digital Markets, outlined that some customers have submitted claims in both processes, resulting in duplicate claims that will need to be settled in one process or the other.
“As such, from July 10, 2024, until the Election Deadline of 4 PM Prevailing Eastern Time on August 16, 2024, the Bahamas Process and the US Process will ask Dotcom Customers to elect which process they wish to participate in. Following the Election Deadline, each Dotcom Customer claim will be handled in either the US Process or the Bahamas Process (according to the election made by the customer). From the Election Deadline, claims confirmed as going forward in one process will be withdrawn from the other, and it will no longer be possible to switch processes. Non-customer creditors of FTX Digital only have a claim in the Bahamas Process and will therefore not be required to complete an election,” the report noted.
The report further noted that the Bahamas and the US processes are aligned in key aspects. Although there are some differences between the Bahamas Process and the US Process, both the US Debtors and the JOLs expect that Dotcom Customers will receive the same value in distributions on or around the same dates, subject to the US Debtors Plan of Reorganisation becoming effective.
In the Bahamas Process, any customer or non-customer creditor who wishes to file an electronic Proof of Debt may still do so up to the proposed Bahamas bar date of 4 PM Prevailing Eastern Time on August 16, 2024 (“the Bahamas Bar Date”). The customer claim bar date for the US Process passed on September 29, 2023. As a result, customers who did not object to their scheduled claim amount in the US Process by that date may be barred from doing so, the report noted.
It also noted that in the Bahamas Process, the claim adjudication process is still ongoing, and as such, customer claims may be admitted at a higher or lower amount than the amount of their claim as submitted. However, for customers who have accepted the scheduled balance on the FTX Digital Claim Portal, the JOLs anticipate these claims will be valued at no less than these amounts.
FTX, headquartered in The Bahamas before its collapse, saw its co-founder and CEO, Sam Bankman-Fried, arrested and extradited from The Bahamas in December 2022. Bankman-Fried was found guilty of defrauding customers and lenders. He was subsequently charged with seven counts of wire fraud, securities fraud, and money laundering stemming from his alleged actions that defrauded FTX customers and lenders, including its affiliated hedge fund, Alameda Research and was sentenced to 25 years in prison.
