A new outside investigation of FTX Trading, the crypto firm that collapsed in 2022 after a massive fraud, should be fast and focused, according to a federal judge. The judge said he wanted to avoid disrupting the company’s insolvency case with another costly and lengthy probe, according to Bloomberg.
The investigation was ordered by a federal appeals court in Philadelphia earlier this month following a request by the Office of the US Trustee, the federal watchdog that oversees corporate bankruptcies. The court said an examiner should be appointed for the Chapter 11 case of FTX Trading but left the details of the probe to US Bankruptcy Judge John Dorsey.
Judge Sets Limits For Examiner
Dorsey, who is presiding over the bankruptcy case in Wilmington, Delaware, sided with the lawyers of FTX Trading and its creditors, who argued that the investigation should be short and limited in scope. They said that the company and its creditors had already conducted extensive investigations into the company’s downfall and the recovery of its assets.
Dorsey agreed that a wide-ranging investigation would waste time and money. He said it might cost tens of millions without uncovering anything new. Instead, he suggested the examiner review the company’s previous investigations and external probes by regulators and prosecutors. Additionally, he emphasized checking for conflicts of interest with FTX Trading’s lawyers.
Dorsey said that the whole process should take no more than 45 days and result in a report by the examiner summarizing the findings. He said that he would work with the attorneys of the company, its creditors, and the US Trustee to finalize a formal proposal to appoint an examiner in the coming weeks.
FTX Trading’s Fraud And Collapse
FTX Trading was a crypto firm that offered a platform for trading digital assets. It was founded by Sam Bankman-Fried, who was later convicted of running a fraudulent scheme that misused the assets of the customers. He stepped down from the company in 2022 and was sentenced to prison.
The company filed for bankruptcy in 2022 and was taken over by restructuring advisers, who have been pursuing billions of dollars in cash and digital assets that were lost or stolen by the fraud. The company has also been facing lawsuits and investigations by various parties, including customers, creditors, regulators, and prosecutors.
The company is planning to ask its creditors to vote on a plan to distribute the money it has recovered in the next few months. The plan will also determine the fate of the company and its remaining assets.
Related Reading | Ethereum Faces Impending Drop To $2,000 As Critical Support Falters