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On Wednesday, a U.S. bankruptcy judge rejected requests for a fresh, independent investigation into the demise of the cryptocurrency exchange FTX, stating that the requested inquiry would contradict ongoing inquiries by FTX’s new management and law enforcement.
Judge John Dorsey in Wilmington, Delaware, denied a request by the U.S. Department of Justice’s bankruptcy watchdog, which argued that an independent examiner should be appointed to look into claims of “fraud, dishonesty, incompetence, misconduct, and mismanagement” that are “too important to be left to an internal investigation.”
The proposed examiner, according to FTX and the committee representing its junior creditors, would repeat work already done by FTX, its creditors, and law enforcement agencies, they argued in opposition to that proposal. According to the corporation, the proposed examination would cost FTX millions of dollars.
In November, FTX, previously one of the biggest cryptocurrency exchanges in the world, filed for bankruptcy, shattering the market and leaving an estimated 9 million consumers and investors facing billions of dollars in damages.
Sam Bankman-Fried, the founder of FTX, has pleaded not guilty on fraud allegations. He is suspected of stealing billions of dollars from FTX clients to settle debts accrued by his Alameda Research hedge fund.
In October, a trial is scheduled for him. Several former top executives, including Caroline Ellison, CEO of Alameda Research, have admitted to fraud.
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