Troubled FTX’s Bahamas unit seeks bankruptcy protection

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FTX Digital Markets Seeks Chapter 15 Protection After Massive Crash of Parent Crypto Exchange.

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The Bahamian arm of troubled cryptocurrency exchange FTX has applied for protection from creditors in the United States.

FTX Digital Markets is seeking Chapter 15 bankruptcy protection, a lawsuit showed on Tuesday.

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Under Chapter 15, foreign debtors can file for bankruptcy in the United States court system, allowing them to protect their assets in the country.

Non-U.S. companies use this provision to protect themselves from creditors seeking to file suits or tie up U.S. assets.

FTX, the third-largest cryptocurrency exchange, filed for bankruptcy on Friday after investors rushed to withdraw $6 billion from the platform and a bailout proposed by rival Binance fell through. CEO and founder Sam Bankman-Fried also stepped down after the introduction

Bankman-Fried, a 30-year-old MIT graduate who has been hailed as the next Warren Buffett, vowed to explain “what happened,” insisting that the exchange has enough assets “to pay off all customers.”

The collapse of FTX sent shockwaves through the crypto world, causing investors to complain that they feel cheated and draw comparisons to the collapse of Lehman Brothers.

Bankman-Fried and his company are under investigation by the Department of Justice and the Securities and Exchange Commission. Investigations are likely to focus on the possibility that the firm used client deposits to fund bets at Bankman-Fried’s hedge fund, Alameda Research, in violation of U.S. securities law.

Credit: www.aljazeera.com /

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