US Trustee Andrew R. Vara filed a motion with the Delaware Bankruptcy Court to hire an independent examiner to investigate FTX’s collapse.
As per the court filing submitted on December 1, the court-appointed investigator will provide a “true neutral” account of FTX’s downfall. Comparing the FTX crisis with that of Lehman Brothers and New Century Financial, Vara added that the investigation can be narrow or broad, depending on the Court’s decision.
According to him, hiring an examiner will also be beneficial to FTX users. This is because FTX’s trading arm lent $10B worth of loans to Alameda Research. Vara said the loans were supposedly issued using clients’ assets, adding,
“[FTX Trading's claim against Alameda Research] involves the alleged conversion of customer funds, [and] calls out for independent scrutiny by an independent examiner.”
The Trustee also questioned the sudden change of leadership at FTX. On November 10, Sam Bankman-Fried signed an "Omnibus Corporate Authority" agreement. The document stated that John J. Ray III’s appointment as the new CEO of FTX was “authorized, instructed, and consented” by Sam. In his words,
“Mr. Ray, as an officer of [FTX], cannot act as a true neutral, especially as to parties whose objectives may conflict with those of [FTX Group].”
If the Court approves Vara’s request, the examiner will be required to reveal their work plan within 15 days of their appointment.
