The troubled firm has taken the step to remove FTX Turkey from chapter 7 bankruptcy, the most recent development in the tale of FTX. Following a jump in the number of withdrawals made by clients, the once-leading cryptocurrency corporation filed for insolvency in the United States on November 11th.
The attention of the regulators was drawn to FTX because of its inability to maintain adequate liquidity and poor fund management. As a direct consequence of this, the authorities in the United States have begun looking into the business and its creator, Sam Bankman-Fried.
According to a recent petition (1), FTX is afraid that the Turkish authorities would not obey directives from US courts regarding its units located in Turkey. The newly installed management inherited from the CEO, suspected of being a fraudster, needs help incorporating FTX Turkey into the company's reorganization strategy.
In his first interview with the public, the newly appointed CEO, John J. Ray III, said that the new team is working toward revitalizing the depleted exchange. Turkish law enforcement, on the other hand, is working to slow down the reform movement.
Action in Turkey on FTX Assets
A few days after FTX filed for bankruptcy in the United States, law enforcement officials in Turkey began an investigation into the actions of the exchange. On November 23rd, the agency issued a warrant for the seizure of any "suspect" assets that belonged to the crypto currency corporation.
The nation's Financial Crimes Investigation Board, better known as MASAK, announced that it would be seizing the assets to comply with the law in the area.
In a brief submitted to the Delaware court, the new management of FTX indicated that it could not incorporate FTX Turkey in its plans to reorganize the company.
The orders this Court has entered have no legal or practical impact in Turkey, and the Debtors have no reason to assume that the Turkish government will comply with the orders that this Court has issued.
As a direct consequence of this, the Debtors cannot exert an adequate level of control over the activities of the Turkish Debtors, making it impossible for them to fulfill their responsibilities as outlined in the Bankruptcy Code.
In addition, the petition included an amendment stating that according to Turkish legislation, the parent business can still initiate legal action. In addition, the document disclosed that several creditors in the area had started filing private claims in the local courts.
Following a comprehensive presentation of the issues concerning FTX Turkey, the business submitted a request to have the Chapter 11 Cases involving Turkish Debtors dismissed. The exchange thinks the matter should be thrown out because it is "in the best financial interest of the Debt holders and their stakeholders."
The Debtors intend to pursue any and all legal remedies available to them against the Turkish government in light of its decision to freeze and confiscate the assets of the Turkish Borrowers in accordance with Turkish law.
The Debtors do not anticipate that the Turkish authorities or any liquidation in Turkey would attempt to seek recognition of their acts in the United States, and the Debtors plan to oppose such distinction if reciprocity is not established."