In a significant development in the bankruptcy proceedings involving defunct exchange FTX and its debtors, the company’s former co-CEO Ryan Salame has agreed to forfeit $5.9 million in Bahamian property as part of a plea deal in a criminal case.
The decision follows Salameh’s September 2023 guilty plea in which he pleaded guilty to criminal charges and agreed to pay $5.6 million in restitution to debtors.
According to a motion filed by FTX Trading Ltd and affiliated debtors in the U.S. Bankruptcy Court for the District of Delaware, Salame promised to fulfill the plea deal by transferring ownership of the assets to the debtors.
However, the deal exempts the former FTX executive from paying cash as he only needs to transfer ownership of his Bahamas residence to FTX Digital Markets Ltd.
“Salame will satisfy the indemnification amount by transferring the Bahamian residence he owns (Marina Residences 3A at Albany Building 10 Condominium) to FTX DM,” the filing says.
The debtors said it was in Salameh’s best interest to surrender the property’s title deeds because the current economic conditions affecting the Bahamas real estate sector would prevent Salameh from selling his home for less.
A recent report from Bahamas Real Estate Agents shows a significant decline in luxury home sales in the region in 2023, which is consistent with broader market trends in other countries such as Australia.
Monetization implications and background details
Given the state of the Bahamas’ real estate sector, allowing Salameh to sell its properties would hinder the debtor’s ability to liquidate other properties in the Bahamas.
The former FTX executive originally purchased the property for $7.2 million through the Alameda Research Fund in September 2021, with FTX Digital Markets facilitating the deal.
The company sent Salame’s real estate attorneys an additional $8.1 million in November to complete the deal.
Salame later signed a promissory note to repay Alameda $8.1 million. However, both FTX and Alameda filed for bankruptcy in 2022.
Legal Consequences and Sentencing
The following year, Salameh was indicted on charges of making illegal political contributions and conspiring to defraud the Federal Election Commission. He was also charged with conspiracy to operate an unlicensed money transmitting business, to which he pleaded guilty. Salameh’s sentencing is scheduled for May 28, 2024, when the court will consider the appropriate punishment for the crime.
Earlier in March this year, a court sentenced former FTX CEO Sam Bankman Fried (SBF) to 25 years in prison for several offenses related to money laundering and other fraud. This sentencing sets a precedent for the severity of the legal consequences of cases involving financial misconduct and fraud within the cryptocurrency sector.
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