NASSAU, BAHAMAS- The Supreme Court of The Bahamas has approved an agreement allowing the Joint Official Liquidators (JOLs) of FTX Digital Markets Ltd. (FTX DM) to reprioritize the payment of customers and creditors of the collapsed cryptocurrency exchange, ahead of the Securities Commission of The Bahamas’ (SCB) $221.55 million regulatory claim.
The agreement, approved by Justice Loren Klein on Wednesday, permits the JOLs to subordinate the SCB’s claim, which was filed for regulatory penalties related to breaches of the Digital Assets and Registered Exchanges Act and the Financial Transactions Reporting Act. The approval of the “Claim Subordination Agreement” will allow payments to FTX DM’s customers and creditors, including any interest due to them, to take priority over the Commission’s claim.
The JOLs’ request was made under their powers to enter into agreements as per the Amended Global Settlement Agreement (GSA) dated August 12, 2024. Justice Klein sanctioned the agreement on January 29, 2025.
FTX, which was headquartered in The Bahamas before its collapse recently announced the approval of its Chapter 11 Plan of Reorganization and that distributions to “Convenience Class” customers and creditors will start in February, while payments to “Non-Convenience Class” customers and creditors are expected to begin in the second quarter of this year.
FTX co-founder and former CEO, Sam Bankman-Fried, was arrested and extradited from The Bahamas in December 2022. He was convicted of defrauding customers and lenders and sentenced to 25 years in prison.