DOJ Seeks Independent Examiner in FTX Fraud Allegations

investopedia.com:

The Department of Justice's Office of the U.S. Trustee filed a motion with the Delaware Bankruptcy Court seeking the appointment of an independent examiner to investigate potential wrongdoing in the collapse of crypto exchange FTX.

«Like the bankruptcy cases of Lehman, Washington Mutual Bank, and New Century Financial before them, these cases are exactly the kind of cases that require the appointment of an independent fiduciary to investigate and to report on the Debtors’ extraordinary collapse,» U.S. Trustee Andrew R. Vara said in the filing.

The examiner should «investigate the substantial and serious allegations of fraud, dishonesty, incompetence, misconduct, and mismanagement by the Debtors,» Vara said in the filing.

He said that he doesn't question the qualifications, competence, or good faith of newly appointed CEO John J. Ray, in his role as a fiduciary for the Debtors’ estates, the questions at stake are «too large, and too important» to be left to an internal investigation.

An examination is preferable to an investigation because the former can be made public, which «is especially important because of the wider implications that FTX’s collapse may have for the crypto industry,» Vara said in the filing.

A parallel civil probe into the collapse of FTX is being conducted by attorneys from the U.S. Securities and Exchange Commission's enforcement division. Similar inquiries were sent to companies that traded or invested on the crypto platform, according to people familiar with the inquiries. While authorities haven’t accused anyone of wrongdoing, they are examining what the company and its leaders told investors and customers as the exchange imploded last month.

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