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:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

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.

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.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates.png

Research

Maple Finance has successfully navigated significant market challenges through its strategic pivot to secured lending (Maple v2) and the launch of its Syrup product. Syrup has become a primary growth driver, delivering sustainable, outperforming stablecoin yields and rapidly increasing TVL. The upcoming custody-first Bitcoin staking product (istBTC) presents another significant avenue for expansion. Crucially, Maple has achieved operational profitability, a key inflection point that, combined with a fully vested token and active buyback mechanism, strengthens its investment case. While valuation metrics suggest potential undervaluation relative to peers and growth, the primary forward-looking risk identified is the long-term sustainability of its current high-take-rate collateral staking revenue model.

article-image

In 2014, Microsoft virus scanners were detecting viruses in Bitcoin software

article-image

Ledn’s Mauricio Di Bartolomeo explained how this cycle’s been different for the lender

article-image

The shorts looking for funding range from charming animated series to gritty live-action dramas

article-image

Money, it turns out, is emergent, like consciousness

article-image

Bridge flows churn in both directions as risk appetite returns