A judge denied a request to appoint an independent examiner in FTX’s bankruptcy case, noting that one would be too expensive when multiple investigations into the troubled crypto exchange are underway.
“I have no doubt that the appointment of an examiner would not be in the best interest of the creditors,” Judge John Dorsey said during a hearing on Wednesday morning. “Every dollar spent in these cases on administrative expenses is $1 less to the creditors.”
The decision comes weeks after an independent examiner released a nearly 700-page report on failed crypto firm Celsius, which filed for bankruptcy in July.
The U.S. Trustee overseeing the bankruptcy had asked the court to appoint an examiner. The FTX debtors and others objected, saying an examiner would be too costly to the bankruptcy estate and could pose security concerns.
Dorsey agreed with the objectors and said he believes FTX CEO John Ray is “completely independent of prior management” and “highly qualified” to sort out the firm’s financial issues and return value to creditors and customers. He also acknowledged that although some FTX employees remain at the company, they are not accused of mismanaging the exchange or its other entities.
“There’s no indication they were involved in any wrongdoing, and according to Mr. Ray, they’ve been stripped of any decision-making authority,” Dorsey said.
FTX and some of its former executives are facing several investigations from the Justice Department and regulators including the Securities and Exchange Commission and the Commodities Futures Trading Commission. Former CEO Sam Bankman-Fried pleaded not guilty to criminal charges and is expected to go to trial in October.
Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.
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