The Department of Justice’s U.S. Trustee has requested a Delaware bankruptcy court to appoint an independent examiner in the ongoing FTX bankruptcy case. An examiner will serve as a third-party court-appointed investigator.
The examiner would be responsible to produce a large and independent report from a perspective the trustee describes as a “true neutral”.
This is prudent as a means to analyze “what is likely the fastest big corporate failure in American history, Andrew R. Vara, the U.S. Trustee wrote in his motion to Delaware’s U.S. bankruptcy court.
An examiner, if approved, will work independently on behalf of the court and the public. On the other hand, John Ray II will continue to act as the CEO, seeking to either preserve what remains of the estate or liquidate it in the interest of all stakeholders.
The examiner’s role can be narrow or broad depending on what the court decides. Moreover, Vara’s motion is mainly focused on whether or not criminal conduct took place within FTX and related companies owned by Sam Bankman-Fried.
Comparing the bankruptcy case of FTX to that of “Lehman, Washington Mutual Bank, and New Century Financial,” Vara writes that an examiner should investigate the serious and substantial allegations of fraud, incompetence, misconduct, Mismanagement, and dishonesty.
The request comes as the FTX collapse triggered the need for crypto regulation. The FTX crisis has prompted regulatory authorities to work on setting clear crypto rules to stop catastrophes like these from happening in the future.
