DOJ Circles the Wagons on FTX

The U.S. Department of Justice wants an independent examiner to look into FTX. 

In a Thursday (Dec. 1) filing in bankruptcy court, U.S. Trustee Andrew R. Vera said that while John J. Ray III — who was appointed FTX CEO as part of the bankruptcy proceedings — and the company’s new management had done valuable preliminary work, “the questions at stake here are simply too large and too important to be left to an internal investigation.” 

“An examiner may also allow for a faster and more cost-effective resolution of these cases by allowing Mr. Ray to focus on his primary duty of stabilizing the debtors’ businesses while allowing the examiner to investigate the Debtor’s collapse and prior management,” Vera wrote. 

Vera also noted in the fling that the collapse of the cryptocurrency exchange was “likely the fastest biggest corporate failure in American history” and that it’s important to have an examination in which the findings are made public because of the implications the case may have for the crypto industry. 

As PYMNTS reported Nov. 17, Ray said in a filing with the bankruptcy court that in his 40 years of corporate restructuring experience — which included time at Enron — he had never seen a company as badly run as FTX. 

“From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” Ray said in the filing. 

The DOJ’s filing came on the same day that Commodity Futures Trading Commission (CFTC) Chairman Rostin Benham appeared before the Senate Agriculture Committee to answer questions about the FTX collapse. 

“The events of the past few weeks embody — in the most regrettable way — the perilous state of the digital asset market,” Benham said Thursday (Dec. 1).