The U.S. Department of Justice (DoJ) has called for U.S. Bankruptcy Judge John Dorsey to appoint a separate, independent third-party examiner to investigate FTX’s bankruptcy further.
US DoJ calls for more investigations on fraud
The U.S. Department of Justice called for the appointment of a separate third-party examiner to unravel fraud, mismanagement, and misconduct cases that likely transpired in FTX’s operations before the firm collapsed.
The legal request befell Judge John Dorsey, overseeing FTX’s bankruptcy case. According to the U.S. Department of Justice, the investigation is too vital to be left behind.
U.S. Trustee attorney Juliet Sarkessian stated that the request made by the US Department of Justice is laid out upfront on the federal law in all significant insolvency cases as prescribed by the DoJ.
FTX lawyer James Bromley expressed his concerns about the request stating that the legal move was not necessary following what has already been undug from the case. Moreover, FTX also mentioned that the investigations requested by DoJ were inappropriate and could stand in the way of FTX’s ongoing investigations.
FTX agreed that its previous management raised eyebrows regarding management and handling customer deposits.
However, another launch of investigations could only mirror what prosecutors have retrieved so far and include additional costs necessary to facilitate the scrutiny. Moreover, the move will continue to prolong and delay the efforts to repay the firm’s creditors.
Another FTX-linked company goes under
The fraud investigation requests come just a few days after another FTX-linked company went under receivership. Emergent Fidelity filed for Chapter 11 bankruptcy protection against creditors after the U.S. government legally seized $500 million worth of Robinhood shares.
Former FTX CEO Sam Bankman Fried and FTX co-founder Gary Wang jointly owned Emergent Fidelity.