The U.S. Trustee, a Department of Justice (DOJ) branch, filed a court document on Wednesday urging the Delaware bankruptcy court to reverse its previous decision regarding the independent examiner in the FTX bankruptcy case. It has been reported that the Trustee claims the bankruptcy court made a mistake during a hearing held in February.
The court rejected the appointment request despite meeting the criteria for appointing an examiner, including the requirement of over $5 million in “qualifying liabilities” within the bankrupt estate.
During the February hearing, Judge John Dorsey of the Delaware bankruptcy court actively supported the FTX estate’s position. Judge Dorsey argued that the ongoing case and investigation could result in costs surpassing $100 million. He further highlighted that conducting the inquiry would unavoidably slow down the proceedings.
In a recent court filing, the U.S. Trustee, a division of the DOJ, requested the Delaware bankruptcy court to reconsider its previous ruling concerning appointing an independent examiner in the FTX bankruptcy case.
The Trustee has asserted that the court made an error during a hearing held in February. Despite satisfying the criteria for an examiner’s appointment, which includes having over $5 million in “qualifying liabilities” within the bankrupt estate, the court had initially rejected the request.
During the February hearing, Judge John Dorsey, presiding over the Delaware bankruptcy court, took an assertive stance supporting the FTX estate. Judge Dorsey contended that the ongoing case and investigation could cost $100 million. Furthermore, he emphasized that the inquiry would inevitably lead to a slowdown in the overall proceedings.
In response to concerns raised by the parties involved in the FTX case regarding the alleged high costs associated with appointing an examiner, DOJ Trustee Andrew R. Vara emphasized the importance of adhering to the statutory requirement of appointing an examiner when the statutory criteria are met, regardless of any alleged expenses. Vara’s stance, outlined in the filing, considers legal and practical factors.
The filing came as an unexpected turn of events following the bankruptcy filing of FTX, a prominent crypto enterprise, in November. The news sent shockwaves throughout the cryptocurrency industry, especially considering that the founder of FTX, Sam Bankman-Fried, is currently facing criminal charges in the U.S.
Given the significant attention and scrutiny surrounding the case, appointing an examiner has become crucial in the ongoing proceedings. This move is necessary to investigate and examine the matter thoroughly.
The emergence of evidence provided by Daniel Friedberg, a former executive at FTX, has further escalated the situation, leading to a class-action lawsuit against celebrities accused of endorsing the now-defunct FTX exchange.
Friedberg’s testimony has shed light on the fact that promotional activities for FTX originated in Florida. This revelation challenges previous claims suggesting that the Miami court lacks jurisdiction and that the allegations are unrelated to the state of Florida.