FTX’s Bahamian real estate purchases - which could be worth a collective $300m - were made through a company currently covered by US Chapter 11 bankruptcy proceedings rather than the Bahamian provisional liquidators.
Documents filed yesterday with the Delaware Bankruptcy Court list FTX Property Holdings, the vehicle used by the failed crypto exchange for its Bahamian real estate acquisitions, as being among the 134 entities placed into Chapter 11 on November 11, 2022.
This potentially sets the stage for a further battle between the Supreme Court-appointed joint provisional liquidators for FTX Digital Markets, the Bahamian subsidiary, and John Ray, the newly-appointed chief executive for FTX Trading and the other companies covered by the Chapter 11 proceedings.
One Bahamian KC, speaking on condition of anonymity, said that as a Bahamian-incorporated company holding Bahamian real estate assets, FTX Property Holdings’ restructuring and potential winding-up should “technically” take place in The Bahamas rather than be led by the Delaware Bankruptcy Court.
However, they said a “jurisdictional battle” between The Bahamas and Delaware for control of FTX Property Holdings and its assets may not be the smartest option in the current environment where a global media spotlight remains focused on this nation. They added that the US would likely seek to exert “might is right”, and take control, especially with the Republicans having taken control of the House of Representatives and looking to probe FTX’s donations to Democrats.
The FTX Property Holdings situation further highlights the complex cross-border and multi-jurisdictional issues facing the Bahamian joint provisional liquidators, Brian Simms KC, the Lennox Paton senior partner, and PricewaterhouseCoopers (PwC) accounting duo Kevin Cambridge and Peter Greaves.
Mr Ray has already succeeded in his bid to have their Chapter 15 bid for legal recognition by the US courts transferred from southern New York to Delaware, with the application yet to be heard. It is likely that both sides will seek to negotiate a compromise, and explore whether they can work together for the benefit of FTX and its creditors, in a bid to avoid potentially costly legal battles and competition for FTX’s assets.
FTX Property Holdings’ address was given as the G.K. Symonette Building on Shirley Street in Nassau. This building is home to the Clement Maynard & Company law firm, which includes Allyson Maynard-Gibson KC, the former attorney general and FTX’s attorney, among its counsel and partners. The Bahamian arm of Alameda Research, the trading entity controlled by embattled FTX chief, Sam Bankman-Fried, is also listed as having this same address.
Based on reports that FTX Property Holdings purchased between $121m to $130m of Bahamian real estate, which could be a conservative estimate given suggestions the total value may be as high as $300m, and the standard attorney’s fee of 2.5 percent of the purchase price for property deals, it is possible that Mrs. Maynard-Gibson and Clement Maynard & Co earned between $3.025m and $3.25m if they handled all this work.
Tribune Business was previously shown a report, which checks confirmed was genuine and had been well-researched, disclosing that FTX has acquired some $74.23m in west New Providence real estate during 2022 alone. Most of these purchases involved property in the high-end Albany community, along with the acquisition of units in the Veridian Corporate Centre.
The acquisitions by FTX Property Holdings, the crypto exchange’s real estate arm, ranged in value from a high of $30m to $8.9m, $7.479m, $7.311m, $7m and $6.75m at Albany, according to the report, which was being widely circulated on social media. Some $4.5m was also spent to acquire the Bayside Executive Park site for its planned $60m headquarters, which is now almost certain not to proceed.
The report also showed a $2.29m purchase at the Veridian Corporate Centre. “The corporate offices for FTX are currently housed at the Veridian Corporate Centre, which was originally built and sold by Sebas Bastian,” the document said. “These are not rentals or leases. FTX has purchased these units outright. Additionally, there is one purchase of a condominium at One Cable Beach for $2m made by Sam Bankman-Fried directly in late 2021.”
Mr. Ray previously alleged that corporate funds belonging to the crypto exchange were used to fund Bahamian real estate purchases by its executives who then put the properties in their own, personal names rather than the company’s.
“In The Bahamas, I understand that corporate funds of the FTX group were used to purchase homes and other personal items for employees and advisors. I understand that there does not appear to be documentation for certain of these transactions as loans, and that certain real estate was recorded in the personal name of these employees and advisors on the records of The Bahamas,” Mr. Ray asserted.
Meanwhile, downtown Nassau’s Margaritaville Beach Resort was revealed to be Alameda Research’s fourth largest creditor with a sum of $55,319 due to it - presumably for providing hospitality and entertainment-related services to Mr. Bankman-Fried’s trading entity. The resort is part of The Pointe complex, built and owned by China Construction America (CCA).
And, intriguingly, another of Mr. Bankman-Fried’s Bahamian entities, Technology Services Bahamas Ltd, was shown as having an Abaco registered address in the residential Pelican Shores area. The address was Johnny Cake Lane, Marsh Harbour, Abaco, Bahamas, indicating it may be registered at someone’s house.
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