FTX’s Bahamas unit files for bankruptcy in New York

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New York
CNN Business
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FTX Digital Markets, the Bahamas-based unit of the recently collapsed cryptocurrency trading platform, has filed for bankruptcy protection in the US.

The company filed Tuesday in New York court under Chapter 15, which is a way for foreign companies to use US bankruptcy law to restructure debt — commonly done because US law offers greater protections than those in other countries.

The move comes after the crypto exchange’s US-based arm, FTX Group, abruptly filed for bankruptcy Friday after facing a “severe liquidity crisis.” FTX founder Sam Bankman-Fried resigned as CEO the same day.

FTX’s rapid collapse marked a stunning downfall for one of the biggest and most powerful players in the crypto industry.

There could be more than 1 million creditors in the US cases that are already filed, FTX Group said Monday, adding that it has been in touch with “dozens” of US and international regulatory agencies including the US Attorney’s Office, the US Securities and Exchange Commission and the Commodity Futures Trading Commission.

Meanwhile, authorities in the Bahamas — where FTX is based — are investigating whether any criminal misconduct occurred related to the company’s implosion, the Royal Bahamas Police Force said in a statement Sunday.

FTX is one of many non-US-based companies to use US bankruptcy law protections. In just this year, Scandinavian airline SAS and British company Cineworld Group, owner of movie theater chain Regal Cinemas, filed for bankruptcy in the United States.

– CNN’s Matt Egan and Allison Morrow contributed to this report.

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