Bahamas Hires US Lawyers to Handle FTX Legal Work

An exterior view shows the Magistrate Court building in the Bahamas where Sam Bankman-Fried appeared before the Chief Magistrate. December 13, 2022. REUTERS/Dante Carrer
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(Reuters) – The government of the Bahamas has hired a U.S. law firm to handle legal work and engage with the U.S. government and media in connection with the collapse of the FTX cryptocurrency exchange, according to a U.S Justice Department filing.

Boston-based Brown Rudnick is advising the Bahamian government on issues related to the FTX bankruptcy and U.S. regulatory and criminal investigations tied to the exchange, said William Baldiga, a bankruptcy partner at the firm and one of the lead lawyers handling the work.

The firm reported the representation in a filing under the U.S. Foreign Agent Registration Act, which requires disclosure of lobbying-related work on behalf of foreign governments or entities. The firm said it is working with Bahamian lawyers and communication experts.

FTX founder Sam Bankman-Fried was arrested on Dec. 12 in the Bahamas, where the exchange was based, and extradited to the United States after U.S. prosecutors accused him of defrauding investors and looting billions in customer deposits.

Bankman-Fried is expected to enter an initial plea of not guilty in Manhattan federal court on Tuesday, a source familiar with the matter told Reuters. He has previously acknowledged risk-management failures at FTX but said he did not believe he was criminally liable.

Lawyers representing FTX in the exchange’s U.S. bankruptcy have accused regulators in the Bahamas of working with Bankman-Fried to undermine the bankruptcy case and withdraw assets to the detriment of some creditors.

The Securities Commission of the Bahamas declined to comment on the claim earlier this month. The commission has previously accused FTX and its current CEO John Ray of creating a “false impression” about the Bahamian government’s response to FTX’s collapse.

The agency said Thursday that it had temporarily taken control of digital assets valued at more than $3.5 billion that were held in FTX’s Bahamas unit.

Brown Rudnick’s filing said it was first hired by the Bahamian government in March to help craft a “country policy position statement regarding digital assets,” and then was re-hired for legal work after FTX’s implosion.

The filing said the firm is registering as a foreign agent because it may also need to communicate or meet with U.S. media outlets or U.S. government agencies on behalf of the Caribbean country “to discuss The Bahamas’ activities and bona fides.”

The Brown Rudnick attorneys advising the Bahamas include Baldiga, Clara Krivoy, co-chair of the firm’s digital commerce group, and Stephen Best, head of its white-collar and compliance group.

Additional reporting by Mike Scarcella
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