Content
Toggle
Previously, the establishment of an independent investigator for FTX was rejected
The bankruptcy team does not meet the “no conflict of interest” standard
Previously, the establishment of an independent investigator for FTX was rejected
Over a year ago, regulatory agencies in multiple states in the United States initiated a joint resolution requesting that a third-party financial examiner for FTX be appointed by a federal bankruptcy judge.
The motion was initiated by the Texas Securities Commission, supported by more than ten regulatory agencies including California, Florida, Hawaii, Idaho, and Washington D.C., emphasizing that the financial condition and lack of transparency of FTX debtors’ assets necessitate the appointment of an independent examiner in order to serve the best interests of the creditors.
Previously, Judge John Dorsey rejected the request in February 2023, stating:
Advertisement – Continue scrolling for the rest of the article
I completely agree that appointing an independent examiner is not in the best interests of the creditors. In cases like this, every additional dollar of administrative expenses means one less dollar for the creditors.
He believes that FTX’s current CEO, John Ray, is completely independent from the previous management of FTX and is highly qualified to handle the bankruptcy case and return assets to the creditors and users. He also believes that the repeated review of the reorganization team and independent investigators would result in excessive costs.
He stated:
There is no doubt that appointing an independent examiner is not in the best interests of the creditors. In these cases, every additional dollar of administrative expenses means one less dollar for the creditors.
However, the Philadelphia Third Circuit Court of Appeals ruled on January 19 that FTX must be investigated by an independent examiner.
The bankruptcy team does not meet the “no conflict of interest” standard
Mr. Purple (@MrPurple_DJ), a member of the crypto community who has been closely following the bankruptcy reorganization, quoted legal documents and pointed out that Judge Luis Felipe Restrepo believes that the ongoing investigation by FTX’s current CEO, John Ray, lacks independence, as the law firm Sullivan & Cromwell previously served as advisors before FTX’s bankruptcy.
Restrepo stated:
If the debtor’s debt exceeds $5 million, according to bankruptcy regulations, an independent examiner must be appointed (FTX definitely falls into this category), and conducting an independent investigation into FTX would also be beneficial to the overall cryptocurrency industry. John Ray’s “independence” does not negate the fact that S&C was an advisor before FTX’s bankruptcy, and it does not meet the “no conflict of interest” standard.
FTX
John Ray
Independent examiner
Bankruptcy reorganization
Further reading
Cryptocurrency Illegal Money Flow in 2023: Stablecoins Becoming the Top Choice for Criminals, Ransomware Still Prefers Bitcoin
FTX Creditors Received Letter from Kroll? Claim Conversion Price List: BTC 16K/ETH 1.2K/SOL 16/FTT Not Calculated