FTX Bahamas Unit Has Officially Filed for Bankruptcy

FTX Digital Markets, headquartered in the Bahamas, is one of more than 100 bankrupt entities affiliated with disgraced mogul Bankman-Fried

article-image
share

The local Bahamas arm of crypto exchange FTX has filed for bankruptcy protection in New York, following more than a hundred affiliates which applied for their own in Delaware last week.

FTX Digital Markets’ provisional liquidator Brian Simms opted for Chapter 15 bankruptcy, while dozens of FTX companies went for Chapter 11.

Simms was appointed by The Securities Commission of The Bahamas late last week after the regulator abruptly ordered the freeze of FTX’s assets.

Chapter 15 affords mechanisms for dealing with insolvency cases involving debtors across multiple jurisdictions. Lawyers estimate FTX owes money to between 100,000 and one million customers around the world.

Under US law, Chapter 15 is designed to provide for the “fair and efficient administration” of cross-border insolvencies that protects interests of all creditors and entities, including the debtor — in this case FTX.

On the other hand, Chapter 11 affords a particular business time to restructure its debt or liquidate assets in a bid to get back on its feet. Reports indicate former FTX CEO Bankman-Fried sought funding last weekend, after FTX filed for bankruptcy.

The exchange last week failed to service withdrawals following a $6 billion bank run and a soured Binance buyout deal, leaving swathes of users out of pocket, ranging from regular traders to crypto startups and hedge funds.

Details have emerged indicating that Bankman-Fried built a backdoor in FTX systems to smuggle user crypto to his trading outfit Alameda Research. The unit apparently lost the funds after making risky bets across the crypto ecosystem.

Curiously, Bahamas residents were first granted access to withdraw funds while the rest of customers across the globe looked on. Bankman-Fried claimed the move was in line with regulators’ requests. The Securities Commission of the Bahamas later denied that was the case.

FTX did not immediately respond to a request for comment.

Veteran insolvency practitioner John J. Ray III, who oversaw Enron’s bankruptcy reorganization in the early 2000s, replaced Bankman-Fried on Friday and immediately commenced voluntary Chapter 11 bankruptcy proceedings for 134 FTX-affiliated companies (although Kenya-based firm AZA Finance, formerly BitPesa, has since disputed its connection).

The filing did not include Bahamas-headquartered FTX Digital Markets. Now that the firm has applied for bankruptcy protection, three others remain in question: FTX Australia, FTX Express Pay and LedgerX.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

morpho 2 graphic.png

Research

Utilizing a ‘DeFi Mullet’ approach, Coinbase’s Bitcoin-backed loans integration with Morpho demonstrates a powerful blueprint for CEXs to monetize dormant assets by expanding adoption of wrapped products (cbBTC, USDC) while also supporting native and/or preferred DeFi ecosystems (Base) which can further lead to downstream growth in onchain liquidity and increased utilization of the related assets.

article-image

The platform also rolled out 13 tokenized funds for institutions on the Connect platform

article-image

The company’s expanded lineup introduces new ETF products, as more and more issuers get into crypto funds

article-image

President Donald Trump announced a 10% levy on almost all goods and additional tariffs on so-called “worst offending” countries

article-image

Solana may be in “recomposition” mode, as new protocols put usefulness ahead of mere virality

article-image

The stablecoin issuer will have to contend with bigger players and the interest rates environment

article-image

The president reportedly was still working on his tariff policy plans late Tuesday evening