Current:Home > reviewsAppeals court reverses judge’s ruling, orders appointment of independent examiner in FTX bankruptcy -Secure Growth Solutions
Appeals court reverses judge’s ruling, orders appointment of independent examiner in FTX bankruptcy
View
Date:2025-04-16 06:55:26
DOVER, Del. (AP) — A federal appeals court has ordered the appointment of an independent examiner in the bankruptcy case of FTX amid concerns about widespread fraud preceding the collapse of the multibillion-dollar cryptocurrency exchange.
A three-judge panel in Philadelphia issued the ruling Friday in an appeal filed by the U.S. bankruptcy trustee, who serves as a government watchdog in Chapter 11 reorganizations. Lawyers for the trustee had argued that FTX’s financial affairs and business operations, including allegations of unprecedented fraud leading to its collapse, should be reviewed by a disinterested person, not left to an internal investigation.
U.S. Bankruptcy Judge John Dorsey denied the trustee’s request last February. He agreed with FTX and its official committee of unsecured creditors that an examiner’s work would be too costly and would duplicate investigations already under way by FTX’s new leadership, the creditors committee and several federal agencies. Dorsey also expressed confidence in John Ray III, who was appointed by FTX co-founder Sam Bankman-Fried as the company’s new CEO on the same day the company sought bankruptcy protection.
Bankman-Fried is awaiting sentencing in March after being convicted in November on wire-fraud and conspiracy charges. Several other former FTX executives have pleaded guilty to similar charges. Prosecutors said Bankman-Fried siphoned billions of dollars from customer accounts at FTX into his cryptocurrency hedge fund, Alameda Research.
The appeals court reversed Dorsey’s ruling, agreeing with the trustee that the bankruptcy code mandates the appointment of an examiner.
“Sometimes highly complex cases give rise to straightforward issues on appeal,” Judge Luis Felipe Restrepo wrote for the panel. “Such is the case here.”
Restrepo also noted that an examiner is required to make his or her findings public, whereas a debtor or creditors committee conducting an internal investigation has no such obligation.
“The collapse of FTX caused catastrophic losses for its worldwide investors but also raised implications for the evolving and volatile cryptocurrency industry,” the judge wrote, noting that further scrutiny of FTX could alert potential investors to undisclosed credit risks in other cryptocurrency companies.
“In addition to providing much-needed elucidation, the investigation and examiner’s report ensure that the bankruptcy court will have the opportunity to consider the greater public interest when approving the FTX Group’s reorganization plan,” he added.
veryGood! (5346)
Related
- USA women's basketball live updates at Olympics: Start time vs Nigeria, how to watch
- South Carolina baseball lures former LSU coach Paul Mainieri out of retirement
- Chrysler recalls over 200,000 SUVs, trucks due to software malfunction: See affected vehicles
- What is paralytic shellfish poisoning? What to know about FDA warning, how many are sick.
- House passes bill to add 66 new federal judgeships, but prospects murky after Biden veto threat
- Singapore Airlines offering compensation to those injured during severe turbulence
- 4 Cornell College instructors wounded in stabbing attack in China; suspect arrested
- Southern Baptists to decide whether to formally ban churches with women pastors
- Tropical rains flood homes in an inland Georgia neighborhood for the second time since 2016
- Biden reacts to his son Hunter's guilty verdict in gun case, vowing to respect the judicial process
Ranking
- Selena Gomez engaged to Benny Blanco after 1 year together: 'Forever begins now'
- Virginia NAACP sues school board for reinstating Confederate names
- American investor Martin Shkreli accused of copying and sharing one-of-a-kind Wu-Tang Clan album
- Connecticut governor vetoes bill that could lead to $3 million in assistance to striking workers
- Mega Millions winning numbers for August 6 drawing: Jackpot climbs to $398 million
- African elephants have individual name-like calls for each other, similar to human names, study finds
- New King Charles portrait vandalized at London gallery
- Céline Dion Was Taking Up to 90-Milligram Doses of Valium Amid Battle With Stiff-Person Syndrome
Recommendation
New Zealand official reverses visa refusal for US conservative influencer Candace Owens
United States men's national soccer team friendly vs. Brazil: How to watch, rosters
MLB's most affordable ballparks: Which stadiums offer the most bang for your buck?
Mega Millions winning numbers for June 11 drawing: Jackpot climbs to $47 million
9/11 hearings at Guantanamo Bay in upheaval after surprise order by US defense chief
YouTube Star Ben Potter’s Cause of Death Revealed
United States men's national soccer team friendly vs. Brazil: How to watch, rosters
After baby's fentanyl poisoning at Divino Niño day care, 'justice for heinous crime'