- The Department of Justice demanded an independent investigation on the FTX collapse.
According to CBS, the U.S. Department of Justice has requested the bankruptcy judge to order an independent investigation into the crash of the FTX crypto exchange.
FTX Exchange, a globally renowned crypto exchange and the third biggest exchange filed for bankruptcy on November 11, 2022, by the Founder of FTX, Sam Bankman Fried.
Crypto Exchange’s Independent Probing Decision
The DOJ is waiting for the green signal of the bankruptcy judge to conduct an independent investigation of the FTX collapse. According to the documents filed for bankruptcy in the court, the DOJ requested “a true neutral” probe in the FTX collapse.
John Ray III acquired the vacant position of CEO of FTX after the resignation of Sam Bankman Fried from the position of Chief Executive Officer of the company.
The DOJ Office trustee highlighted in written papers that it doesn’t question John Ray’s “qualifications, competence or good faith,” his role is trustworthy for the firm’s debtors and therefore, the internal examination may not represent at all.
The newly appointed CEO of FTX is working hard to figure out the major points that led FTX to file for bankruptcy, but the DOJ also requested an independent assessment of FTX’s failure.
Andrew Vara, U.S. Trustee, mentioned in the document submitted to the court, “But the questions at stake here are simply too large and too important to be left to an internal investigation.”
Andrew further wrote, “an examiner could—and should—investigate the substantial and serious allegations of fraud, dishonesty, incompetence, misconduct and mismanagement.”
John has ample experience as a Chief Restructuring Officer with forms like Enron, Overseas Shipholding Group, and more.
John wrote in the documents submitted to the court that he “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”
The failure of FTX has held approximately $3.1 billion in funds of around the top 50 creditors, and billions of dollars are lost by other customers who invested in FTX.
Andrew noted the facts and figures mentioned by John Ray and media coverage of the company’s downfall “provide reasonable grounds to suspect that Bankman-Fried and others participated in actual fraud, dishonesty or criminal conduct in the management of FTX.”
Vara concluded by saying, “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.”
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.