%1

The developer of “League of Legends,” one of the world’s most popular videogames, wants to end a lucrative sponsorship deal with FTX, saying its association with the bankrupt cryptocurrency exchange is damaging its brand and potentially hurting its upcoming competitive season due to the uncertainty of the funding, WSJ Pro Bankruptcy reported. Riot Games Inc. said in papers filed on Friday with the U.S. Bankruptcy Court in Wilmington, Del., that it doesn’t have time to replace FTX as a sponsor for the 2023 League of Legends competitive season, but wants to end the sponsorship as soon as possible so it can find a new cryptocurrency exchange partner. The League of Legends esports league boasts the third most-watched professional sport in the world among males between 18 and 34 years old, behind only the National Football League and National Basketball Association, Riot said in the filing. The FTX sponsorship was the largest Riot had ever signed for an esport league and represented a critical funding source for compensating its teams, the company said. FTX paid Riot $4 million in 2021 and agreed to pay the videogame maker $12.5 million in 2022 and roughly $12.88 million in 2023, according to a partially redacted copy of the agreement filed in bankruptcy court.

FTX’s U.S. managers are negotiating with Bahamian authorities to resolve a dispute over access to the failed crypto exchange’s electronic records, lawyers said in a court hearing Friday, following weeks of publicly criticizing each other over the handling of FTX’s collapse, WSJ Pro Bankruptcy reported. FTX Chief Executive John J. Ray III and company lawyers met in New York on Thursday with representatives of the Securities Commission of the Bahamas and Bahamian court-appointed liquidators to try to resolve a dispute over sharing information from inside the exchange that is relevant to their investigative work. “While we haven’t come to any conclusions, we did have a productive exchange of views,” FTX lawyer James Bromley said during a hearing in the U.S. Bankruptcy Court in Wilmington, Del. The Bahamian liquidators have sought access to data from FTX’s international trading platform, email records from employees of FTX’s Bahamas affiliate, FTX Digital Markets Ltd., employee Slack chat records, documents stored on a shared company Google Drive and FTX’s QuickBooks accounting system, according to court papers. Their access to the information was cut off by FTX’s U.S. management on Nov. 12, a day after FTX filed for chapter 11, according to their court filings.

Former FTX Chief Executive Sam Bankman-Fried is expected to appear in court in the Bahamas today to reverse his decision to contest extradition to the United States, where he faces fraud charges, Reuters reported. The 30-year-old cryptocurrency mogul was indicted in federal court in Manhattan on Tuesday and accused of engaging in a scheme to defraud FTX customers by using billions of dollars in stolen deposits to pay for expenses and debts and to make investments for his crypto hedge fund, Alameda Research LLC. His decision to consent to extradition would pave the way for him to appear in U.S. court to face wire fraud, money laundering and campaign finance charges. Upon arrival in the United States, Bankman-Fried would likely be held at the Metropolitan Detention Center in Brooklyn, though some federal defendants are being held at jails just outside New York City due to overcrowding at the facility, said defense lawyer Zachary Margulis-Ohnuma. At his initial court hearing in Manhattan, Bankman-Fried would be asked to enter a plea and a judge would make a determination on bail, Margulis-Ohnuma said. The attorney added that such a hearing must take place within 48 hours of Bankman-Fried's arrival in the United States, though it would likely be sooner. Prosecutors will likely argue that Bankman-Fried is a flight risk and should remain in custody because of the large sums of money involved in the case and the unclear location of those funds.

Attorneys for the U.S. bankruptcy trustee in Delaware and several major media outlets are challenging an effort by cryptocurrency exchange FTX to withhold names of the company’s customers and creditors from the public, the Associated Press reported. At a brief hearing Friday, the judge presiding over the FTX bankruptcy granted a motion by media outlets to intervene for the purpose of objecting to the sealing of creditor information. A separate objection by the U.S. trustee, the government watchdog that oversees chapter 11 reorganizations, also was on the agenda for Friday’s hearing but was postponed by Bankruptcy Judge John Dorsey until Jan. 11, when he likely will also hear arguments from the media. In a court filing earlier this week, an attorney for Delaware’s acting U.S. trustee noted that “disclosure is a basic premise of bankruptcy law.” “The debtors simply cannot seek bankruptcy protection and then do business behind a shield of secrecy” Juliet Sarkessian wrote. Sarkessian warned that allowing FTX to shield creditor lists and financial schedules would be a “slippery slope” and create an unfavorable precedent for bankruptcies in which creditors are also customers. Last month, Judge Dorsey temporarily granted a request by FTX to redact the names and addresses of clients and creditors from court filings, even though such information is typically public. The judge did direct FTX to file an unredacted creditor matrix under seal with the court, but the company has yet to do so.

Hess Corp. put a subsidiary into bankruptcy to try to avoid litigating hundreds of asbestos lawsuits tied to an oil refinery it no longer owns. Now workers from that unit are focusing on suing Hess instead, Bloomberg News reported. The legal team for over 600 plaintiffs who say they developed lung disease after working at a U.S. Virgin Islands refinery said in a filing Tuesday it would withdraw pending litigation against the now-bankrupt subsidiary, Honx Inc. It plans to instead proceed with lawsuits against Hess Corp directly for its role in the workers’ asbestos exposure, plaintiffs’ attorney Warren Burns told Bloomberg. Lawyers previously said Honx filed its bankruptcy petition in April “in bad faith,” in order to dodge the up to $1 billion in liabilities it faced. Using bankruptcy to quickly and cheaply settle piles of liability lawsuits has become an increasingly favored tactic in recent years for corporations facing mass litigation. Johnson & Johnson, lumber giant Georgia-Pacific and 3M Co. have tried the maneuver, with varying degrees of success. The refinery in the Virgin Islands used asbestos to insulate boilers, heaters and pipelines. Workers say they were exposed to, and sickened by, the carcinogen during maintenance and turnaround processes at the refinery.

Lawyers for the bankrupt crypto exchange FTX on Wednesday opposed a demand for internal records from an insolvent affiliate based in the Bahamas, saying they "do not trust" the Bahamian government with data that could be used to siphon off assets from the bankrupt company, Reuters reported. Liquidators of FTX's Bahamian business, FTX Digital Markets, had asked U.S. Bankruptcy Judge John Dorsey to give them access to the U.S. unit's Slack, Google and Amazon Web Services accounts and data. At a court hearing in Delaware, lawyers for FTX asked Dorsey to deny the request. They argued that Bahamian regulators had worked with FTX's founder, the recently arrested Samuel Bankman-Fried, to undermine the U.S. bankruptcy case and withdraw assets to the detriment of some creditors. FTX attorney James Bromley told Dorsey that the Bahamian government has previously obtained information from FTX Digital Market's liquidators and used it to siphon digital assets away from FTX. "This is dangerous information," Bromley said. "We do not trust the Bahamian government." The Securities Commission of the Bahamas (SCB) has previously disputed FTX's "misstatements" about the Bahamian government's response to FTX's collapse.

A top executive of FTX’s Bahamas subsidiary warned that country’s securities authority days before the company filed for bankruptcy Nov. 11 of customer fund transfers to Alameda Research, a cryptocurrency trading firm tied to FTX, according to documents made public Wednesday. The warning prompted the regulator to immediately seek a criminal investigation, according to the documents, WSJ Pro Bankruptcy reported. Securities Commission Executive Director Christina Rolle requested that the financial crimes unit of the Royal Bahamas Police Force open an investigation into the subsidiary, FTX Digital Markets Ltd., the same day based on the warning of FTX Digital Chairman Ryan Salame. “Regrettably, the commission was informed today by [Mr. Salame]…that clients’ assets which may have been held with FTX Digital were transferred to Alameda Research,” Ms. Rolle wrote to the police commissioner. “The commission understood Mr. Salame as advising that the transfer of clients’ assets in this manner was contrary to the normal corporate governance and operations of FTX Digital,” Ms. Rolle wrote, and that “such transfers were not allowed and therefore may constitute misappropriation, theft, fraud or some other crime.”

Senate Banking Committee Chair Sherrod Brown (D-Ohio) said that U.S. lawmakers don’t need to reinvent the wheel as they consider legislation after the collapse of Samuel Bankman-Fried’s FTX crypto empire, Bloomberg News reported. The panel’s hearing on Wednesday is the second this week by Congress to scrutinize the fallout of FTX’s bankruptcy. The company imploded in November, sending shock waves across the industry and fanning criticism of weak oversight. Bankman-Fried was arrested in the Bahamas on Monday after the U.S. government filed criminal charges amid multiple probes into his possible misconduct. “If we are going to learn from FTX’s meltdown, we must look closely at the risks from conflicts at crypto platforms that combine multiple functions,” Brown said. “It means thinking about the kinds of disclosure that consumers and investors really need to understand how a token or crypto platform works.” Brown said in remarks before the hearing that lawmakers can look at existing banking and securities laws for time-tested approaches as a way of overseeing crypto businesses. Separately, Sens. Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kansas) said Wednesday they are introducing a bill to address the national-security risks posed by cryptocurrencies and other digital assets. The proposed legislation would close loopholes in anti-money-laundering rules and help counter terrorism financing, they said in a statement.

Until its collapse, FTX had been one of the world’s largest cryptocurrency exchanges — and one of the most aggressive at marketing digital currencies to the masses. The company had partnerships with NBA teams, patches on Major League Baseball umpire uniforms and the naming rights to the Miami Heat arena. It ran splashy TV ads during NBA and NFL games, including last year’s Super Bowl, in which celebrities portrayed FTX as an exciting but safe place to invest money, the Washington Post reported. On Tuesday, the U.S. government brought both criminal charges and civil actions against Samuel Bankman-Fried, the 30-year-old founder of FTX, accusing him of orchestrating one of the biggest financial frauds in U.S. history. But the odds of restitution for FTX customers are slim. “We’re not going to be able to recover all the losses here,” FTX’s new chief executive John J. Ray III told the House Financial Services Committee on Tuesday. So plaintiffs are trying a different approach. Working with Coral Gables, Fla., lawyer Adam Moskowitz, their lawsuit seeks to shift the focus from FTX executives to what Moskowitz sees as a larger circle of complicity that includes some of the world’s most celebrated actors and athletes. Moskowitz argues that FTX’s interest-bearing accounts were a security, which would require NFL quarterback Tom Brady and other promoters to reveal the details of their payments from FTX. The complaint claims “they have never disclosed the nature, scope, and amount of compensation they personally received in exchange for the promotion.” Instead, they appeared in ads featuring such moments as an enthusiastic Brady dialing up everyone in his contact list to pitch crypto trading on FTX, asking again and again: “You in?”

York County and Rock Hill (N.C.) will have to wait a bit longer in efforts to recover public money given to the failed Carolina Panthers’ $500 million practice facility and headquarters after a federal judge on Dec. 14 delayed the confirmation of bankruptcy proceedings, the Rock Hill Post and Courier reported. GT Real Estate, the development company controlled by the NFL team’s owner David Tepper, had sought the judge’s approval of its plan to pay off debts incurred during construction at the site along Interstate 77, closing out bankruptcy proceedings first filed in June. Tepper’s company also sought approval of separate settlement agreements recently struck with the county and city over the combined $41 million in public funds contributed to the project, intended to cover the cost of roads and other infrastructure. But Bankruptcy Judge Karen Owens raised concerns on the proposal from Tepper’s lawyers on waivers that would bar subcontractors from seeking further repayment from the general contractor and Tepper entities. The judge will not approve the bankruptcy proceedings until Tepper’s companies can present a restructuring plan that is satisfactory, she said in court. Owens and Tepper’s lawyers are scheduled to meet Dec. 15 to discuss a suitable outcome. It is unknown when a final decision from the judge is expected. In the plan Tepper’s lawyers presented to Judge Owens yesterday about $150,000 in funds to subcontractors would go unpaid. The lawyers argued in court that this number was fair because $60 million was being paid to subcontractors in the process of their restructuring. The billionaire hedge fund manager pulled out of the landmark project, which was expected also to include retail, a hotel, offices and medical facilities in addition to the practice facility and team headquarters, more than halfway through construction, having spent $170 million.