The United States Trustee handling the bankruptcy case involving FTX has filed a motion requesting that the court appoint an independent examiner.
The US Trustee conducting FTX’s bankruptcy proceedings has referred to the now-defunct exchange as the “quickest big business collapse in American history” and is calling for an independent investigation to look into the reasons for the disappearance of the bag.
After hitting a market high of $32 billion earlier in the year, debtors “suffered a virtually unprecedented decline in value” over the course of eight days in November, according to receiver Andrew Vara. This led to a severe liquidity crisis as a result of a “proverbial ‘run on the bank'”.
In most bankruptcies, independent examiners are called in when it is deemed to be in the best interests of creditors or when the amount of unsecured liabilities exceeds $5 million.
This type of examiner was retained to look into charges of mismanagement by Celsius as part of its ongoing Chapter 11 lawsuit. This form of examiner has also been retained to investigate other high-profile bankruptcy cases, such as the one involving involves Lehman Brothers.
“Like the bankruptcy cases of Lehman, Washington Mutual Bank and New Century Financial that preceded them, these cases are exactly the type of cases that require the appointment of an independent trustee to investigate and report on the extraordinary collapse of the Debtors. “The Receiver said. “These cases are exactly the type of cases that require the appointment of an independent trustee.”
Referring to FTX’s failure, Vara said that “the issues at stake here are too large and significant to be left to an internal investigation.”
According to the motion, the appointment of an examiner, which requires court approval, would benefit clients and other interested parties because they could “investigate substantial and serious allegations of fraud, dishonesty, incompetence, misconduct, and mismanagement” by FTX. This would benefit customers and other interested parties because they could “investigate material and serious allegations of fraud, dishonesty, incompetence and mismanagement.”
Additionally, the motion indicates that an examiner could look into the circumstances surrounding FTX’s collapse, the movement of client assets off the exchange, and the question of whether or not companies that have lost money on FTX can claim losses. .
Since taking over as FTX CEO on November 11, John J. Ray III has been extremely critical of the company’s operations. On the first day of trial, he claimed that the company used “software to hide the misuse of client funds” and that there was “a complete absence of reliable financial information.” He also claimed that control of the company was concentrated “in the hands of a very small group of people with no experience, no sophistication and potentially compromised.” .”
In related news, the United States Attorney’s Office for the Southern District of New York and the United States Securities and Exchange Commission are said to have sent a series of requests to investors and companies that worked closely with FTX, requesting information about the company and its key figures. The requests were reportedly sent to investors and companies that worked closely with FTX.