• Ray moves to set ‘legal privilege’ aside

• Minister, ex-AG named in info request

• Along with UoB, non-profits, retailer

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FTX’s US chief is accusing his Bahamian counterparts of seeking to “shield from scrutiny” details of their interviews with Sam Bankman-Fried and other key insiders that he now wants handed over.

John Ray, who heads 134 FTX entities currently in Chapter 11 bankruptcy protection, is urging the Delaware Bankruptcy Court to “compel” FTX Digital Markets and its Bahamian provisional liquidators to disclose their “discussions” with the crypto exchange’s embattled founder and other key staff on the basis that the contents could be critical to settling their long-standing jurisdictional battle.

Opening a new front in his ongoing fight with Brian Simms KC, the Lennox Paton senior partner and attorney, and PricewaterhouseCoopers (PwC) accountants Kevin Cambridge and Peter Greaves, the FTX US chief has seized on a deposition given by the latter to argue that the only evidence the crypto exchange’s international platform and customers were transferred to the Bahamian subsidiary comes from Bankman-Fried and other former staff.

As a result, he is demanding that “Bahamian privilege” - the confidentiality afforded to communications between clients and their attorneys, and in investigating potential disputes - be swept aside and the necessary information by provided by the joint provisional liquidators and their attorneys to his team.

Besides dealings with Mr Bankman-Fried and key former FTX staff, Mr Ray’s original document requests - filed with the Delaware Bankruptcy Court last Friday - reveal he is also seeking “all communications” between the Bahamian trio and their advisers and a current Cabinet minister, former Cabinet minister, government ministries, and local non-profits and businesses concerning Mr Bankman-Fried and the crypto exchange’s collapse.

Those targeted by Mr Ray are named as Clay Sweeting; Allyson Maynard-Gibson KC and her daughter, Zoe Gibson-Bowleg, who legal papers show also worked for FTX; Jean Chalopin, Deltec Bank & Trust’s chairman; and “the University of the Bahamas, Quality Home Centre, Bahamas Humane Society, the Agricultural Development Organisation, the Ministry of Education, BAARK or the Ministry of Youth, Sports and Culture”.

It is unclear why any dealings between the Bahamian provisional liquidators and these individuals and entities have attracted Mr Ray’s interest, although several of the non-profits named are thought to have received donations from FTX. There is no suggestion that those named have done anything wrong in relation to FTX and its late 2022 implosion.

Mr Simms and the PwC accountants, though, objected to Mr Ray’s demands and refused to provide the information sought because the request is “vague, ambiguous, overly broad and unduly burdensome.

“The FTX Digital Markets defendants further object on the grounds that this request seeks documents that are entirely irrelevant to this adversary proceeding and therefore not proportional to the needs of the case. The FTX Digital Markets defendants further object to this request to the extent it seeks privileged information,” they added.

This, though, has not halted Mr Ray’s pursuit of the matter. Sascha Rand, a US attorney representing the US chief, wrote to counsel for the Bahamian provisional liquidators on August 10, 2023, asking: “We understand that you intend to assert privilege over any pre-liquidation communications with counsel to FTX Digital Markets.

“Please confirm, however, that you will not withhold communications with Allyson Maynard-Gibson, who was retained by chapter 11 Debtor FTX Trading, not FTX Digital Markets, whether such communications occurred before, on, or after November 10, 2022.” That is the date when FTX Digital Markets was placed into liquidation before the Supreme Court of The Bahamas.

Jason Zakia, an attorney with White & Case, the law firm acting for Mr Simms and the PwC duo, replied on August 22, 2023, stating: “We will review any documents collected in response to this request for privilege, including any documents or communications by or between anyone who acted as FTX Digital’s counsel, such as Allyson Maynard-Gibson.”

However, Mr Ray’s counsel, via an e-mail sent on August 24, 2023, asked White & Case to confirm their understanding that the Bahamian provisional liquidators will not release “communications with Allyson Maynard‐Gibson or anyone else at the Clement Maynard firm, who was retained by FTX Trading on June 25, 2021” on the basis that these are covered by legal privilege.

The same e-mail also sought confirmation that the Bahamian trio “intend to withhold.... as privileged” all details of their interviews, discussions and meetings with Bankman-Fried during the month between FTX’s November 10, 2022, implosion and his arrest on December 12 last year.

Mr Ray’s interest appears to have been sparked by Mr Greaves’ June 6, 2023, deposition in which he confirmed he had interviewed the FTX founder in-person along with his provisional liquidation colleagues. Asked when he interviewed Bankman-Fried, Mr Greaves replied: “Over a period roughly from, again, I suspect it wasn’t November 14, but the 15th or 16th of November, through to the day that he was arrested.”

However, the Bahamian liquidators’ attorneys shut the line of questioning down, and told the PwC accountant not to answer when asked what was discussed with the FTX founder, on the basis that witness interviews as part of the trio’s investigation “would be privileged as a matter of Bahamian law”.

Earlier, asked how the Bahamian provisional liquidators had determined FTX’s international platform and customers had been moved to FTX Digital Markets, which is now in their care, Mr Greaves said this information came chiefly from former FTX chief operating officer, Constance Wong, and compliance head, Jessica Ferguson Murray.

“We were in a position where a lot of people had fled the scene, but there were a number of individuals who were still around who were employees of FTX Digital Markets that we could speak to,” Mr Greaves said.

“There were little or no paper files. That’s not the way this group seemed to operate. The majority of electronic data, so I don’t know, Word documents, if they used such things, spreadsheets, e-mails, messaging were all kept on the cloud and we were denied access to that. That was switched off from us [by Mr Ray and his team].”

The FTX US chief is now demanding that the Delaware court order that legal privilege be breached, and the contents of these interviews disclosed, as he is arguing they form the only evidence the Bahamian provisional liquidators have that the crypto exchange’s international platform and clients, together with their assets, belong in the FTX Digital Markets estate rather than the Chapter 11 proceedings.

“The joint provisional liquidators have asserted that the debtors’ assets, property and customers ‘migrated’ to FTX Digital Markets in the months before the petition date. The joint provisional liquidators’ purported core evidence to support that assertion is their month’s-long discussions with Sam Bankman-Fried, his co-conspirators and others,” Mr Ray alleged.

“The information and materials the joint provisional liquidators obtained from these dozens of meetings, which purport to anchor their claims concerning FTX Digital Markets’ ownership of the FTX international exchange’s assets, are highly relevant both to this adversary proceeding and to the joint provisional liquidators’ expansive, multi-billion-dollar proofs of claim [over $9bn].”

“Through a blanket assertion of ‘Bahamian privilege’, the joint provisional liquidators now seek to shield these discussions and related information from disclosure and scrutiny. These materials, which purportedly include records of extensive discussions with the debtors’ own founders, executives, agents and employees concerning the formation, purpose and operations of FTX Digital Markets and the location of various FTX assets, go to the heart of the issues in this proceeding,” he added.

“The joint provisional liquidators’ effort to shield the substance of their discussions with former insiders is particularly inappropriate given that the core executives of the debtors are either facing criminal charges or criminal exposure, and the materials the debtors seek from the joint provisional liquidators reflect the only currently available sources of those insiders’ views on key issues and facts.”

Mr Ray also produced David Alexander KC, a UK attorney, to rebut the ‘privilege’ argument and explain why the Bahamian liquidators “cannot now shield these materials from disclosure”. He then claimed: “The plain fact is that the joint provisional liquidators’ claim that FTX Digital Markets now owns the debtors’ assets grew out of Bankman-Fried and his co-conspirators’ desperate efforts in November and early December 2022 to retain control of his fraudulent empire and ensconce himself in The Bahamas.

“And this is the genesis of the debtors’ instant Motion - understanding exactly what the joint provisional liquidators’ discussions with Bankman-Fried and the other co-conspirators were concerning the formation of FTX Digital Markets, FTX Digital Markets’ role in the FTX scheme, and Bankman-Fried’s efforts to maintain control over the FTX international exchange and its assets.”