U.S. Courts Seek to Take Control of $7.3B in FTX Assets Amid Bankruptcy

In a recent bankruptcy hearing, a federal judge dismissed a request to transfer control of embattled crypto exchange FTX’s $7.3 billion disputed assets to a foreign court.

The decision dashed the hopes of Bahamian liquidators seeking to stake a claim on some of these assets, as U.S. Bankruptcy Judge John Dorsey emphasized the core jurisdictional issue of asset ownership.

The hearing, held at the U.S. Bankruptcy Court for the District of Delaware, shed light on a contentious point between the parties involved in the case: the ownership of FTX’s significant cryptocurrency and cash assets.

During the bankruptcy hearing, the primary point of contention revolved around the ownership of FTX’s multi-billion dollar crypto and cash assets.

Bahamian liquidators argued that a judge in the Bahamas should oversee a portion of the bankruptcy case, seeking jurisdiction over the assets.

However, FTX’s restructuring advisors, who assumed control of the exchange after the arrest of its founder, Sam Bankman-Fried, on fraud charges, opposed the request.

U.S. Bankruptcy Judge John Dorsey made it clear during the hearing that he would not defer a core jurisdictional issue to a foreign court.

He firmly asserted that determining the rightful owner of the assets fell within the purview of U.S. jurisdiction.

Judge Dorsey emphasized the critical nature of this jurisdictional issue, firmly stating, “Under no circumstances would I ever defer a core jurisdictional issue to a foreign court.” His stance firmly rejected the Bahamian liquidators’ hopes of asserting control over the disputed assets.

The judge’s decision to maintain control over FTX’s $7.3 billion in assets within U.S. jurisdiction has significant implications for the bankruptcy case.

It reinforces the authority of the U.S. Bankruptcy Court for the District of Delaware in determining the resolution of the asset ownership dispute.

With this jurisdictional matter settled, further proceedings can now focus on the complex issues surrounding the redistribution and resolution of FTX’s significant cryptocurrency and cash holdings.