Bankrupt crypto-currency exchange FTX could be in for a twist in the proceedings. In the latest development, the U.S. Department of Justice bankruptcy authority has made demands before the bankruptcy judge that could extend the investigation further.
Will FTX bankruptcy proceedings be delayed?
According to reports, John Dorsey, a U.S. bankruptcy judge overseeing FTX’s Chapter 11 proceedings, has been asked to appoint an independent examiner in the investigation. The Department of Justice’s bankruptcy oversight agency has indicated that this is necessary to verify allegations of fraud, misconduct, incompetence, etc.
The judge will rule on the request Monday. However, FTX objected to the suggestion and called it wasteful and redundant. The crypto-currency exchange mentioned that the appointed examiner would repeat the work involved by the law enforcement agency, FTX and its creditors.
FTX stated that this process will add another layer of review that only delays the proceedings and efforts FTX has put into repaying its customers.
Will this decision benefit creditors?
According to reports, FTX’s new boss, John Ray, has offered his support to work with the court-appointed examiners. However, he also said that the additional costs involved in the legal process. John Ray said the examiners cost about $150 million in the two pending cases, while creditors received minimal benefits.
It is important to note that the Creditors’ Committee supported FTX’s opinion on the application by calling it “redundant“. However, securities regulators in several U.S. states supported the Justice Department’s decision.