FTX Urges Court to Exclude Turkish Subsidiary From Bankruptcy Proceedings

• The filing shows that FTX Trading Ltd, the market maker, owns 80%.
• Local authorities in Turkey may seize any FTX Turkey assets they deem necessary.

Since court decisions from U.S. courts do not have a legal or practical impact in Turkey, the defunct FTX cryptocurrency exchange has asked the bankruptcy court in Delaware to exclude its Turkish subsidiaries from the case.

In its Friday filing, FTX also claimed that it has “no reason to believe that the Turkish government will comply with this Court’s orders,” meaning that it will be unable to “exercise sufficient control” over the Turkish units’ operations in order to fulfil its obligations under the Bankruptcy Code.

Waste of Time and Resources

FTX Turkey is a local subsidiary of FTX. The latter filed into Chapter 11 bankruptcy in November, and by the end of the month, the Turkish Treasury and Finance Ministry had seized the company’s assets and begun investigating the exchange’s demise.

The filing shows that FTX Trading Ltd, the market maker, owns 80% of the local exchange and that SNG Investments, an indirect wholly-owned subsidiary of Alameda Research LLC, owns the other 20%. It is stated in the petition that neither FTX Turkey nor SNG Investments are “strategic” to FTX’s overall business.

Citizens have also reportedly begun filing private claims and beginning execution actions against FTX Turkey Turkish Debtors. Therefore, according to FTX, local authorities in Turkey may seize any FTX Turkey assets they deem necessary to fulfil judgements handed down by Turkish courts, and any assets owned by FTX Turkey in the nation may be subject to private claims and procedures.

FTX concludes that extending the proceedings against the Turkish companies “will result in a waste of scarce resources and the unnecessary accumulation of fees,” and that termination of the Turkish companies is in the best interests of both creditors and the debtors’ estates.

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