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FTX Bankruptcy: Judge Delays Decision On Appointing Independent Examiner Amid Cost Concerns

07 Feb 2023

Judge John Dorsey has delayed his decision on whether to appoint an independent examiner in the FTX case. At the latest hearing, Dorsey acknowledged that the cost to debtors could reach tens of millions of dollars. Currently, the bankruptcy judge is hopeful that the issue will be resolved through a mutually agreed upon solution between both parties. A representative for the U.S. Department of Justice’s Trustee contended, however, that the appointment of an independent examiner was mandated by Congress and no longer within Dorsey’s authority.

Three days ago, Bitcoin.com News reported on the U.S. Trustee in the FTX bankruptcy case and the government’s request to appoint an independent examiner. At the latest hearing, FTX’s lawyers from Sullivan & Cromwell argued that the endeavor could be costly.

John J. Ray III, FTX’s new CEO, estimated that expenses could reach between $90 million and $100 million. James Bromley of Sullivan & Cromwell said, “It’s just going to result in duplicated effort and a significant amount of expense. We don’t have enough money to pay back all of our creditors.”

Bromley maintained that there is “no evidence” that any outside professionals would be more impartial than FTX’s current experts. FTX debtors have a number of experts working on the case including the cybersecurity firm Sygnia. FTX’s executives and legal teams are collaborating with criminal investigators and top government regulators.

Ray, FTX’s new CEO, earned roughly $690,000 for his work last year and continued to work during Christmas and the holiday season. Juliet Sarkessian, representing the U.S. Trustee, characterized the FTX situation as a “dumpster fire” and emphasized that the appointment of an examiner was mandated by Congress in these circumstances.

Sarkessian’s comments align with the letter sent to the court by senators Cynthia Lummis (R-WY), Thom Tillis (R-NC), Elizabeth Warren (D-MA), and John Hickenlooper (D-CO). The senators urged the court to appoint an independent examiner, emphasizing that numerous questions “remain unanswered.” Sarkessian believes that an examiner may uncover information that would not be discovered otherwise and could reveal any wrongdoing by specific FTX employees.

During his testimony, FTX CEO Ray described the bankruptcy as “pure hell” when he listed his expenses from 2022. He also noted that FTX was unlike anything he had ever encountered and that former FTX executives did not maintain “a single list of anything.”

What are your thoughts on the ongoing FTX bankruptcy case and the potential appointment of an independent examiner? Share your insights in the comments section below.

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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