Appointing an independent examiner was mandated by the United States Court of Appeals for the Third Circuit to the court supervising the bankruptcy of bitcoin exchange FTX, following the first filing some months earlier.
Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware was overruled by three justices of the Third Circuit on January 19, compelling the court to choose an examiner to supervise FTX’s case.
Judge Dorsey’s denial of Andrew Vara’s application to designate an examiner in FTX’s bankruptcy case in February 2023 triggered the appeals procedure.
The judges stated that more openness “for the evolving and volatile cryptocurrency industry” would result from putting an independent examiner in charge of the FTX bankruptcy case.
The bankruptcy court would be able to “consider the greater public interest” in decisions about FTX’s reorganization plan, according to the Third Circuit, if there was an independent investigation.
The decision dated January 19 stated, “An investigation into FTX Group’s use of its own cryptocurrency tokens, FTTs, to inflate the value of FTX and Alameda Research could bring [the crypto industry] under further scrutiny, thereby alerting potential investors to undisclosed credit risks in other cryptocurrency companies.”
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