Lawyers for cryptocurrency exchange FTX have criticized former CEO and founder Sam Bankman-Fried for creating a “chaotic environment” in court documents filed Thursday as the company faces bankruptcy proceedings.
FTX’s lawyers said Bankman-Fried’s “unconventional leadership style,” “his incessant and disruptive tweets,” and “near lack of reliable corporate records” complicated efforts to restructure the firm. They also accused the disgraced cryptocurrency mogul of trying to move assets from the US to the Bahamas, where they will be under the control of the Bahamian government, in an apparent attempt to circumvent US regulators.
FTX, once the world’s third-largest exchange with a valuation close to $32 billion, sent shockwaves through the cryptocurrency world on Friday when it announced it was filing for bankruptcy, along with Alameda Research and other affiliated companies. Days earlier, industry rival Binance pulled out of a deal to buy its struggling competitor after taking a look at the books and learning that FTX had “mismanaged client funds.”
Bankman-Fried announced his resignation as CEO as Delaware bankruptcy papers were filed on Friday.
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Now under new management, FTX called these bankruptcy proceedings “unprecedented” and asked a federal judge in Wilmington, Delaware to transfer a competing bankruptcy case filed by Bahamian liquidators in New York to Delaware to consolidate all cases relating to the bankruptcy of FTX.
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“Having two bankruptcy courts consider related issues just doesn’t make sense,” wrote the lawyers. “It would result in potentially inconsistent opinions, duplication of effort and unnecessary spending.”
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They argued that the filing in New York was a “blatant attempt” to avoid Delaware court oversight and called for the cases to be consolidated “to end the chaos and to ensure that assets can be secured and sorted in a trial ordered that all proceedings relating to Debtors and their affiliates … be held in one venue”.
NEW FTX BOSS SENTENCES BANKMAN-FRIED FOR ‘COMPLETE FAILURE OF COMPANY CONTROLS’
Both the company and Bankman-Fried are under investigation in the United States and other countries for possible securities violations amid allegations that FTX used $10 billion in client funds to support Alameda Research, its trading firm affiliate.
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New CEO John Ray III accused his former boss of allowing “a complete failure of corporate controls” in a separate filing in US Bankruptcy Court for the District of Delaware.
Megan Henney of FOX Business contributed to this report.