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A US court has excluded FTX Turkish units from the company’s bankruptcy case after a request from the exchange’s representatives.
A US judge has approved removing all FTX Turkish units from the sunken crypto exchange’s ongoing US bankruptcy case. FTX had petitioned the bankruptcy court to approve the exclusion of Turkish units after authorities from the Middle Eastern nation seized most of the assets there. The collapsed Bahamian exchange also suggested that Turkish authorities might not cooperate with US courts. In a court filing last month, FTX representatives noted:
“The orders entered by this court do not have legal or practical effect in Turkey, and the debtors have no reason to believe that the Turkish government will comply with this court’s orders. As a result, the debtors are unable to exercise sufficient control over the affairs of the Turkish debtors in order to comply with their duties under the bankruptcy code.”
On Monday, Delaware Bankruptcy Court Judge John T. Dorsey signed the Turkish dismissal approval in response to the January request. According to the bankruptcy court, the request is in FTX and its estates’ “best interests.”
Parent company FTX owns 80% of the Turkish outlet, while FTX’s sister trading firm Alameda Research wholly owns SNG Investments.
Recap of FTX Turkish Subsidiary Development
Turkish law enforcement announced that FTX’s local activities were under investigation just days after the exchange’s November bankruptcy. At the time, FTX Turkey explained that it braved the headwinds caused by its parent company’s collapse to cater optimally to users. In a statement, the Turkish chapter said:
“Even during the technical difficulties caused by FTX, the FTX [Turkey] team worked hard not to victimize the users by giving their best and continues to work. Sharing transparent information about the process from its social media accounts, we manage this process professionally and in a way that does not [impact] its users.”
However, following its investigation into FTX’s local branch, the Turkish law enforcement team seized most of FTX Turkey’s assets in the country. According to the authorities, the confiscated assets were suspicious and taken in accordance with Turkish laws. In addition, the country’s Financial Crimes Investigation Board, also known as MASAK, said it sought permission from Istanbul’s Chief Public Prosecutor’s Office regarding the seizures. Furthermore, at the time, Turkish authorities also revealed the opening of a judicial investigation against the “suspects.” According to Turkey’s Financial Crimes Investigation Agency, all persons, banks, institutions, and crypto service providers affiliated with FTX were under investigation. Furthermore, the agency also added that FTX’s Turkish subsidiary might also come under probe due to its ties to Sam Bankman-Fried-linked entities.
Since FTX’s sudden and dramatic collapse last November, SBF has been holed up at his parents’ house in the US. The disgraced founder pled not guilty to all charges early last month and is awaiting trial in October. Some of the charges levied against Bankman-Fried are misuse of customers’ funds and wire fraud.
FTX’s collapse late last year further mired the entire crypto space in an insolvency crisis that impacted several other crypto companies. Many of these crypto companies had direct investments in the failed Bahamian exchange at the time of its collapse.