The collapse of FTX has been the subject of a lengthy legal battle, with the latest development being a federal appeals court ordering the appointment of an independent examiner to scrutinize the case. This decision overturns an earlier ruling by bankruptcy court judge John Dorsey denying the trustee’s request for an examiner.
According to the Associated Press, the appeals court in Philadelphia made the decision following a three-judge bench ruling. This comes after FTX’s founder and former CEO, Sam Bankman-Fried, was found guilty of fraud and other charges, with his sentencing scheduled for March 2024. However, earlier this month, US prosecutors hinted at not pursuing a second trial for Bankman-Fried.
The appeals court’s ruling stated that an independent examiner is necessary to review the collapse of FTX, as it follows allegations of massive fraud. This independent review is deemed necessary rather than relying on internal investigations done by FTX’s new CEO, federal agencies, and the committee of unsecured creditors. The court also noted that an examiner has the obligation to make all findings public, unlike debtor or creditors’ committees.
FTX had argued against the appointment of an independent examiner, citing the high cost and duplication of efforts already being made by other parties involved in the case. However, the appeals court agreed with the bankruptcy trustee’s position that an independent review is crucial in this situation.
The collapse of FTX occurred in November 2022, and since then, there have been ongoing legal battles and investigations into the company’s operations. The appointment of an independent examiner is a significant development in this case and will provide a more thorough and unbiased review of the situation.
