State officials support push for independent examiner in FTX bankruptcy

Quick Take

  • Officials from several U.S. states have joined Texas to ask a federal bankruptcy court judge to appoint a third-party examiner of FTX’s finances.
  • The officials filing have ongoing regulatory actions against FTX.

Officials from more than a dozen states want a federal bankruptcy judge to appoint a third-party examiner of FTX's finances, citing the need for more transparency about the collapsed crypto exchange's assets.

The motion, led by the Texas State Securities Board, and joined by regulators from Alaska, Arkansas, California, Florida, Hawaii, Idaho, Illinois, Kentucky, Maine, Maryland, New Hampshire, New Jersey, North Carolina, Oklahoma, Tennessee and Washington, D.C., cites “the magnitude and history of mismanagement” by FTX and Alameda’s previous leadership, as noted in bankruptcy and congressional testimony by current caretaker Chief Executive Officer John Ray III.

The officials assert that, “the lack of transparency into the financial condition and assets of the debtors, and the continued regulatory investigations that are ongoing, the appointment of an examiner with specific guidelines as to their duties is not only appropriate and in the best interest of creditors, but mandatory,” under bankruptcy law.

The motion joins previous requests for an examiner made by the U.S. Trustee, an office within the Justice Department tasked with promoting efficiency and transparency in the bankruptcy process, as well as officials from Wisconsin and Vermont.

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