The FTX debtors in possession have filed a motion to authorize a second phase of investigation into the issues surrounding the collapse of the US crypto exchange. This new phase of the investigation will focus on three major issues, including the extent of legal firm Sullivan & Cromwell’s representation of Sam Bankman-Fried, potential claims against former shareholders of Ledger Holdings who sold their interests to FTX US, and the frequency and magnitude of holes in the balance sheet at FTX US. The investigation is expected to take around 10 weeks and cost approximately $3 million.
The previous report made allegations about FTX attempting to pay off whistleblowers, using customer funds to address capital issues at their bank, and executives being aware of problems prior to the collapse. The debtors found evidence that FTX US had insufficient assets, including the inclusion of cash in reconciliations that should not have been included. Former CEO Bankman-Fried had asserted that FTX US was solvent before his conviction, but the ongoing investigation by the debtors in possession has revealed evidence to the contrary.
Objections to the motion for the second phase of investigation are due by June 24, and a hearing to discuss it is scheduled for July 17. The motion seeks to further delve into the issues surrounding the collapse of FTX US and uncover any potential wrongdoing or negligence that may have contributed to the exchange’s downfall. The investigation aims to provide a comprehensive overview of the situation and hold accountable those responsible for any mismanagement or misconduct that led to the collapse.
The decision to pursue a second phase of investigation demonstrates the commitment of the debtors in possession to uncover the truth behind the collapse of FTX US. By exploring additional avenues of inquiry, the investigation seeks to shed light on the full extent of the issues at hand and ensure that any responsible parties are held accountable. The cost and timeline for the investigation have been carefully outlined to provide transparency and accountability throughout the process.
The allegations of improper conduct, misuse of customer funds, and misrepresentation of financial solvency by FTX US are serious and require a thorough and in-depth investigation. The second phase of the investigation will help to clarify the extent of these issues and determine the impact on creditors and stakeholders involved. By following due process and conducting a comprehensive investigation, the debtors aim to bring closure to the FTX US collapse and ensure that justice is served.
In conclusion, the motion for a second phase of investigation into the collapse of FTX US is a crucial step in uncovering the truth behind the events that led to the exchange’s downfall. By diligently following through with the investigation, the debtors in possession seek to hold accountable any parties responsible for misconduct or mismanagement. The ongoing efforts to uncover the facts and address the issues at hand highlight the commitment to transparency and justice in resolving the aftermath of the FTX US collapse.
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