- Department of Justice Trustee Andrew R. Vara argued that the court must reassess its decision not to appoint an independent examiner in the FTX bankruptcy case.
- Judge John Dorsey ruled against the appointment in February, backing the FTX estate’s claims about the unnecessary costs of an examiner and slowing down proceedings.
- The ruling constituted a “legal error” filed by U.S. Trustee Vara who added costs concerns do not overshadow statutory requirements.
Department of Justice Trustee Andrew R. Vara filed that the court must reassess its decision not to appoint an independent examiner in the FTX bankruptcy case.
Delaware Bankruptcy Court Judge John Dorsey previously ruled against hiring an independent examiner to investigate FTX’s collapse. The bankrupt estate argued that appointing an examing would slow down the case and the costs might exceed $100 million, an unnecessary expense that could limit the funds available to creditors, the crypto exchange said.
John Dorsey backed the estates’ arguments and ruled against appointing an examiner in a February court hearing.
Independent Examiner Revisited In FTX Case
A Wednesday filing from the U.S. DOJ Trustee called Judge Dorsey’s ruling a “legal error”. The filing stressed that FTX met the criteria for an independent examiner. U.S. Trustee Vara’s filing noted that costs concerns and fast proceedings do not overshadow statutory requirements.
…any costs associated with appointing an examiner do not justify departure from the statutory requirement to appoint an examiner where, as here, the statutory criteria are met.
During previous arguments regarding the matter, U.S. Trustee Vara emphasized the need to hire an independent examiner to look under FTX’s hood and demystify the company’s books after the crypto exchange collapsed due to a lack of corporate controls.
At the time, the DOJ also pointed to existing precedent in the Celsius case where a report from an independent examiner uncovered a Ponzi scheme-like structure and massive malpractice by company executives.
In other FTX news, the bankrupt crypto exchange is suing founder Sam Bankman-Fried and other former executives over lack of due diligence in a $220 million investment that resulted in a 99.5% loss.
Source : Ethereum World News