Global Squabbles Erupt Around the World Over the Remaining Crypto Assets of FTX – Mish Talk

December 6, 2022

Global Aspirations of Crypto Meet the Hard Reality of Law

The predicted legal mess over FTX has exploded in Global Clashes Over FTX Bankruptcy

In Cyprus, the country’s securities regulator is complaining that Mr. Ray’s decision to place FTX in bankruptcy has stymied investigations and is preventing European customers from getting their money back.
Officials in the Bahamas, where FTX moved its headquarters last year, are accusing Mr. Ray of making false statements and suggesting that his team is motivated by the prospects of earning hefty legal fees.
On Nov. 10, the Securities Commission of the Bahamas began steps to liquidate FTX Digital Markets, the unit controlling the company’s international exchange. The liquidators later ordered the transfer of the unit’s crypto assets to a digital wallet controlled by the Bahamian government.
In response to the Bahamas seizure, Mr. Ray lawyers effectively accused officials in the Bahamas of theft.
In Turkey, authorities have seized the assets of FTX’s local subsidiary, an affront to Mr. Ray’s efforts to sweep FTX’s assets into the chapter 11 process in Delaware. Turkey found nearly $3.1 million in assets in FTX Turkey Teknoloji Ve Ticaret AS.
The company’s initial bankruptcy petition listed more than 130 affiliates in countries ranging from Canada to Ghana to Japan.

Bankrupt BlockFi

BlockFi was one of the big causalities of the FTX bankruptcy as noted in BlockFi Bites the Dust, Hundreds of Thousands of Customer Assets Wiped Out

Hoot of the Day

Bankrupt BlockFi said it will focus its attention on getting assets from bankrupt FTX.

Bankman-Fried‘s Effort to Vindicate Himself

FTX founder Sam Bankman-Fried is on a whirlwind speaking tour seeking to vindicate himself.

Mr. Bankman-Fried has said he didn’t intend to commit any fraud, emphasis mine.

Mr. Bankman-Fried, speaking at the New York Times DealBook Summit in New York, denied knowingly commingling customer funds to back his crypto trading operation and tried to deflect some of the blame for FTX’s collapse away from himself, saying he was surprised at the size of Alameda’s bets that went wrong.

“I didn’t know exactly what was going on,” Mr. Bankman-Fried said via livestream from the Bahamas. “I learned a lot of these things as they were going on.”

Bankman-Fried’s Legal Defense Underway

Please consider Justice.Gov archives on Intent to Commit Fraud.

The government must prove that the defendant had the specific intent to defraud. See United States v. Diggs, 613 F.2d 988, 997 (D.C. Cir. 1979) (“Because only ‘a scheme to defraud’ and not actual fraud is required, proof of fraudulent intent is critical.”), cert. denied, 446 U.S. 982 (1980); see also United States v. Costanzo, 4 F.3d 658, 664 (8th Cir. 1993) (intent is an essential element, inquiry is whether defendants intended to defraud); United States v. Porcelli, 865 F.2d 1352, 1358 (2d Cir.) (specific intent requires intent to defraud, not intent to violate the statute), cert. denied, 493 U.S. 810 (1989); cf. United States v. Reid, 533 F.2d 1255, 1264 n. 34 (D.C. Cir. 1976) (“Proof that someone was actually defrauded is unnecessary simply because the critical element in a ‘scheme to defraud’ is ‘fraudulent intent,’ Durland v. United States, 161 U.S. 306 . . . (1896), and therefore the accused need not have succeeded in his scheme to be guilty of the crime.”); United States v. Bailey, 859 F.2d 1265, 1273 (7th Cir. 1988) (court held that there must be sufficient evidence that the defendant acted with intent to defraud, that is, “willful participation in [the] scheme with knowledge of its fraudulent nature and with intent that these illicit objectives be achieved.” (quoting United States v. Price, 623 F.2d 587, 591 (9th Cir. 1980), cert. denied, 449 U.S. 1016 (1980), overruled on other grounds by, United States v. DeBright, 730 F.2d 1255 (9th Cir. 1984)), cert denied, 488 U.S. 1010 (1989).