The Department of Justice (DOJ) wants to hire an independent investigator to look into how Sam Bankman-crypto Fried’s empire, FTX, came to an end due to substantial and significant charges of fraud, dishonesty, and incompetence.
This approach might be used by the DOJ to gather proof of corruption. Andrew Vara, the US bankruptcy trustee, submitted paperwork to the federal bankruptcy court in Delaware.
Independent Probe
In his justifications, he argued that the allegations of corporate wrongdoing and catastrophic failure necessitated a speedy examination of the events surrounding FTX’s unexpected collapse three weeks ago.
Vara claims there is solid evidence that Bankman-Fried and other FTX managers either neglected their managerial responsibilities or engaged in fraud.
Renato Mariotti, a former federal prosecutor, stated to CNBC that I believe the DOJ is attempting to obtain evidence through the bankruptcy process.
According to Mariotti, the DOJ and bankruptcy estates may collaborate on fraud cases when putting together potential restitution or other forms of proceedings to make victims whole.
He stated that the agency would participate in asset recovery and perhaps develop a Victims Fund to recompense victims of what the DOJ would consider a fraud.
Vara has stated that an external audit is preferable to an internal investigation due to the potential effects of the company’s failure on the crypto industry as a whole.
READ MORE: FTX Bankruptcy: Crypto Assets Worth $740 Million Recovered
FTX Scandal
Another legal expert conjectured that outside factors could be at work, such as the executives of FTX’s extensive political activity with both major political parties.
It is customary to appoint a bankruptcy trustee. One was chosen to oversee the cryptocurrency bankruptcy of Celsius Network. In instances of bankruptcy that are more severe than a certain threshold, an examiner must be appointed.
The US trustee has determined that an examiner’s engagement is necessary since FTX’s fixed, liquidated, and unsecured commitments to customers total more than $5 million.
The collapse of FTX in November rocked the cryptocurrency market as a whole and caused hundreds of millions of dollars in losses for creditors.
BlockFi, a bitcoin lender, recently declared bankruptcy in New Jersey. The rumored potential bidder for the troubled company is FTX.
In its statement, the corporation listed $1 to $10 billion in assets and liabilities, along with 100,000 creditors. It surfaced a $275 million loan to Fried’s FTX US, which was owned by bankrupt Sam Bankman.
READ MORE: FTX Bankruptcy: Founder Sam Bankman-Fried’s Questionable Digital Transfer to Bahamas Government
