Non-US Customers of FTX Forming Official Committee

International customers of FTX.com are creating a committee to represent them in the firm’s Chapter 11 case.

Customers from outside the United States have interests different from those of other creditors, particularly when it comes to funds that were transferred to the FTX-affiliated entity Alameda Research, CoinDesk reported Tuesday (Dec. 13).

They need to establish that funds moved from customer accounts to other firms affiliated with FTX are not part of the FTX bankruptcy estate, according to the report.

To represent their interests, a group of such customers of FTX.com had already formed an ad hoc group and now aim to create an official customer committee that would protect their rights of ownership, would get additional rights within the Chapter 11 case and would be entitled to professional fees from the estate, the report said.

The non-U.S. customers are being led by Eversheds Sutherland attorneys Sarah Paul and Erin Broderick, according to the report.

“It is undisputed that $10 billion of the $16 billion in customer funds on the FTX.com exchange was transferred to Alameda,” Broderick said, per the report. “Whether the customer assets were fraudulently transferred to satisfy Alameda’s liabilities or whether the transfers are just one piece of a Ponzi scheme remains to be seen, but it doesn’t change the fact the FTX.com customers have a greater legal and equitable right to the return of their own property or the value thereof before it is distributed out to other creditors or used or sold by the debtors without the protection of their interests.”

Reached for comment, Eversheds Sutherland told PYMNTS in an email that its U.S. Restructuring Team now represents holders of $1.65 billion in claims, that it submitted a formal claim to the U.S. Trustee for the appointment of an official committee on Dec. 2, and that it has received interest from FTX.com customer around the world since the request went public.

An official committee has “significant force” in a Chapter 11 to act on behalf of those it represents, the firm said.

“Now that FTX.com customers have finally received some information regarding their rights in the Chapter 11 process and an actual opportunity to get a seat at the table, their willingness to quickly mobilize as a collective force to advance the common interest has truly been remarkable,” Broderick said in the email.

This report comes on the same day that FTX founder and former CEO Sam Bankman-Fried was arrested in the Bahamas on charges filed by U.S. prosecutors.

As PYMNTS reported Tuesday, he is said to await extradition to the United States from the Bahamas, although the timeline of this extradition remains unclear.

The U.S. Department of Justice (DOJ), Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have each brought charges against him.

The potentially illegal commingling of customer funds between FTX and Alameda, which Bankman-Fried continually and fraudulently dipped into, is at the center of both FTX’s collapse and Bankman-Fried’s legal woes.

The report also comes on the same day that FTX’s caretaker CEO appeared before the House Financial Services Committee to provide testimony into how Bankman-Fried and his tight-knit group of lieutenants ran what was once a $32 billion cryptocurrency business into the ground, harming over 1 million customers along the way.