NASSAU, BAHAMAS — FTX US chief John Ray III has claimed in recently filed court documents that a former Bahamian government official, acting as an attorney, was offered a $1 million “bonus” to procure a business license for FTX Digital Markets within ten weeks, and the company was able to obtain the license six weeks later.
Ray who heads the 134 FTX-related entities in Chapter 11 bankruptcy protection noted in his second interim report that FTX senior executives intentionally commingled and misused customer deposits. He claimed that FTX co-founder Sam Bankman-Fried, with the assistance of a senior FTX Group attorney (“Attorney-1”) and others, lied to banks and auditors, executed false documents, and moved the FTX Group from jurisdiction to jurisdiction, taking flight from the United States to Hong Kong to the Bahamas, “in a continual effort to enable and avoid detection of their wrongdoing.”
According to Ray, FTX executives sought to minimize any substantive change or scrutiny of their business by moving the company to The Bahamas, noting that Carolyn Ellison who ran Alameda Research had claimed that the FTX Group moved to The Bahamas because the country had a “friendly” regulatory environment that was “cutting back on red tape.”
Ray noted: “In moving to the Bahamas, where they incorporated FTX DM in July 2021, the FTX Senior Executives sought to minimize any substantive change to or scrutiny of their business. Thus, for example, on behalf of the FTX Group, in July 2021, Attorney-1 offered a former Bahamian government official, acting as an attorney, a $1 million “bonus” to procure a necessary business license for FTX DM within ten weeks. The attorney obtained the license less than six weeks later.”
Rya noted that as has been widely reported, at the direction of Bankman-Fried and other FTX executives, the FTX Group spent over $243 million on real estate in the Bahamas, including multi-million dollar luxury properties for FTX Group employees and their friends and family. Ray noted that the FTX Group funded these real estate purchases from accounts that held commingled customer and corporate funds.
“The FTX Group purchased most of this real estate through a subsidiary, FTX Property Holdings Ltd., which was incorporated in the Bahamas in July 2021 at the request of Attorney-1. Because FTX Property Holdings did not have its own bank account, however, FTX DM funded the purchases using its operating account in the Bahamas,” Ray noted.
According to Ray, approximately $8.7 billion in customer-deposited assets was misappropriated from the FTX.com exchange, the vast majority of which was in the form of cash and stablecoin.
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