The Bahamas wants the US government to return 35 different properties valued at more than $256 million that were bought by Sam Bankman-Fried’s cryptocurrency exchange FTX before it filed for Chapter 11 bankruptcy protection last month.
Attorneys representing the Bahamian government told a federal bankruptcy judge in Delaware that Bankman-Fried, then its chief executive, and Ryan Salameh had amassed a large real estate portfolio on the Bahamian island of New Providence.
Bahamas representatives told the judge that under Bahamian law, it is illegal to allow the US bankruptcy proceedings to administer the estate, According to CNBC.
The Bahamian government wants a judge to dismiss bankruptcy proceedings against the FTX subsidiary listed as the owner of the property.
“Bahamian law does not permit recognition of insolvency proceedings against a Bahamian company,” the island nation’s lawyers told the judge.
But Bankman-Fried’s successor as CEO, John Ray, who has been tasked with overseeing the company’s bankruptcy reorganization, is likely to resist any effort by the Bahamian government to seize control of the assets.
Ray told the House Financial Services Committee on Tuesday that he is seeking to recoup more than $7 billion that could be returned to FTX investors — though that process could take weeks, if not months.
“At the end of the day, we’re not going to be able to recover all the losses here,” Ray said Tuesday.
“There’s money spent there that we’ll never get back.”
Bankman-Fried was arrested by Bahamian authorities on Monday night at the request of the US government. He is currently being held in a prison in Nassau, the capital of the Bahamas.
Federal prosecutors in Manhattan on Tuesday filed an indictment against the banker-Fried, who is accused of wire fraud, securities fraud and money laundering.
They allege that Bankman-Fried developed a “scheme and trick” to defraud FTX customers and investors beginning in 2019.
Prosecutors said in a 13-page indictment that he diverted their money to cover expenses, debts and risky trades at his Alameda Research crypto-hedge fund, and to make large real estate purchases and large political donations.
If convicted, he faces a maximum sentence of more than 100 years in federal prison.
Bankman-Fried has said she will fight extradition to the United States, but that could delay the process for several weeks, legal experts said.
Under Bankman-Fried’s watch, FTX spent a lot of money on expensive real estate for the company’s CEOs and other top executives.
Bankman-Fried’s parents, Stanford University law professors Joseph Bankman and Barbara Fried, are listed as the owners of a $16 million luxury property they use as a “vacation home.”
A representative for the couple said the company had begun the process of returning the property to FTX before filing for bankruptcy.