FTX bankruptcy judge rejects call for new investigation into crypto exchange’s collapse By Reuters


© Reuters. FILE PHOTO: The logo of FTX is seen at the entrance of the FTX Arena in Miami, Florida, U.S., November 12, 2022. REUTERS/Marco Bello

By Dietrich Knauth

(Reuters) -A U.S. bankruptcy judge on Wednesday denied calls for a new, independent investigation into the collapse of crypto exchange FTX, saying that the proposed investigation would be redundant to other investigations being carried out by FTX’s new management and law enforcement.

Judge John Dorsey in Wilmington, Delaware, rejected a request by the U.S. Department of Justice’s bankruptcy watchdog, which argued that an independent examiner must be appointed to investigate allegations of “fraud, dishonesty, incompetence, misconduct, and mismanagement” that are “too important to be left to an internal investigation.”

FTX and the committeee representing its junior creditors opposed that demand, saying that the proposed examiner would merely duplicate work already being done by FTX, its creditors, and law enforcement agencies. The proposed examination would also drain millions of dollars from FTX’s limited funds, the company argued.

FTX, once among the world’s top crypto exchanges, shook the sector in November by filing for bankruptcy, leaving an estimated 9 million customers and investors facing billions of dollars in losses.

FTX’s founder Sam Bankman-Fried, who has been accused of stealing billions of dollars from FTX customers to pay debts incurred by his Alameda Research hedge fund, has pleaded not guilty to fraud charges.

He is scheduled to face trial in October. Several former top executives, including Alameda Research CEO Caroline Ellison, have pleaded guilty to fraud.


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