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Home BUSINESS

Court Demands Independent Investigation into FTX’s Operations

Conie by Conie
January 25, 2024
in BUSINESS
Reading Time: 3 mins read
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  • Appeals court ruled that an independent examiner must be appointed to investigate FTX’s collapse, overturning an earlier decision.
  • Judge said the probe led by FTX’s CEO has concerning conflicts of interest, so a neutral investigation separate from current leadership is needed.
  • Ruling opens the door for more transparency and accountability in the FTX bankruptcy case.

The Third Circuit Court of Appeals made a major ruling regarding the investigation into the collapse of cryptocurrency exchange FTX. An independent examiner must be appointed to conduct the investigation, the court said, overturning an earlier decision.

Background on the FTX Bankruptcy Case

FTX filed for bankruptcy in November 2022 after a liquidity crisis caused the company to implode. The Department of Justice has been overseeing the bankruptcy case through a U.S. Trustee.

In December, the U.S. Trustee requested that an independent examiner be appointed to investigate FTX’s downfall separately from the probe being conducted by FTX’s current CEO, John Ray III. However, the bankruptcy judge denied this request in February.

Appeals Court Rules Independent Examiner Must Be Appointed

The appeals court overturned the bankruptcy judge’s decision on Friday.

Judge Luis Felipe Restrepo wrote in the opinion that the independent examiner cannot be an “interested party” and must be truly separate from FTX.

Restrepo explained that the probe led by CEO John Ray has concerning conflicts of interest. For example, some employees involved in potential fraud may still work at FTX.

JUST IN: 🇺🇸 Circuit Court of Appeals rules FTX must undergo an independent examination

Challenging the sufficiency of the current internal investigation led by FTX's CEO John Ray III

— BlockNews.com (@blocknewsdotcom) January 19, 2024

Why An Independent Investigation is Necessary

The judge stated that appointing an examiner is required by bankruptcy law for a case of this massive size.

Furthermore, he said an independent investigation into FTX’s practices could benefit the broader crypto industry by revealing risks and improving investor protections.

Overall, the appeals court firmly asserted the need for a neutral investigation separate from the current leadership of FTX. This ruling opens the door for more transparency and accountability as the bankruptcy process continues.

Disclaimer: BlockNews provides independent reporting on crypto, blockchain, and digital finance. All content is for informational purposes only and does not constitute financial advice. Readers should do their own research before making investment decisions. Some articles may use AI tools to assist in drafting, but every piece is reviewed and edited by our editorial team of experienced crypto writers and analysts before publication.
Tags: BusinesscryptoFTX
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Conie

Conie

Conie is a Web3 enthusiast, an experienced creative writer, and a passionate gamer. With her ability to fuse innovation with imagination, she brings a distinctive perspective to each piece she writes, delving into the ever-changing territories of the digital world, storytelling, and virtual adventures.

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