By
Mayowa Adebajo
April 11th, 2024
A few days after FTX filed bankruptcy in the US, law enforcement in Turkey launched a probe into the exchange’s activities.
The latest update of the FTX saga is the distressed company’s move to exclude FTX Turkey from the bankruptcy case. The once-upon-a-time top crypto company filed for bankruptcy in the US on the 11th of November following a surge in customers’ withdrawals. FTX suffered a lack of liquidity and mismanagement of funds, attracting regulators’ attention. As a result, the US authorities launched an investigation into the company and its founder Sam Bankman-Fried.
According to a filing on the 27th of January, FTX is concerned that the Turkish authorities may not follow instructions from US courts on its units in Turkey. The new management that took over from the suspected fraudster CEO is having difficulty in including FTX Turkey in its restructuring plan. The new CEO, John J. Ray III, said in his first public interview that the new team is working on reviving the drained exchange. However, Turkish law enforcement is pulling back the restructuring movement.
New Management Wants Freedom for FTX Turkey
A few days after FTX filed bankruptcy in the US, law enforcement in Turkey launched a probe into the exchange’s activities. On the 23rd of November, the agency ordered the seizure of all “suspicious” assets belonging to the crypto company. The country’s Financial Crimes Investigation Board, also MASAK, announced that it was confiscating the assets in compliance with local law. The new FTX management noted in the Delaware court filing that it is unable to include FTX Turkey in its reform plans.
”The orders entered by this Court do not have legal or practical effect in Türkiye 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 the duties under the Bankruptcy Code.”
In addition, the filing added that the parent company can still take action under Turkish law. The document further revealed that some creditors in the region are beginning to file private claims in local courts. After thoroughly stating the concerns on FTX Turkey, the company requested the dismissal of the Chapter 11 Cases of the Turkish Debtors. The exchange believes that nullifying the case is in the “best interest of the Debtors and their stakeholders.”
“The Debtors intend to pursue any rights they may have against the Turkish authorities with respect to the freeze and seizure of the property of the Turkish Debtors under Turkish law. The Debtors do not expect the Turkish authorities or any liquidator in Türkiye to seek recognition of their actions in the United States, and the Debtors would intend to object to such recognition if reciprocity is not established.”
Read other crypto news here.