U.S. Trustee asks bankruptcy court to appoint FTX trustee

The U.S. Trustee has asked a Delaware bankruptcy court to appoint an examiner in the ongoing FTX bankruptcy case.

In a Dec. 1 court filing, the U.S. Trustee cited a “virtually unprecedented decline in value” as well as comments from FTX CEO John Ray III as reasons to appoint an independent examiner. An examiner, if approved, would act as a third-party, court-appointed investigator. It is a common step for the government to request one in a complex bankruptcy like the Chapter 11 bankruptcy most of the FTX-affiliated companies are now in.

FTX Digital Markets, the trading arm based in the Bahamas, has also filed bankruptcy there. The Bahamian government has indicated it does not plan to cooperate with requests to fully move that process, so as to consolidate all proceedings. 

FTX filed for Chapter 11 bankruptcy protection on Nov. 11. Since then, statements and filings have revealed a chaotically-run exchange that, in the words of Ray, suffered from a “complete failure of corporate controls.” Those words were quoted in the U.S. Trustee filing.

“Like the bankruptcy cases of Lehman, Washington Mutual Bank, and New Century Financial before them, these cases are exactly the kind of cases that require the appointment of an independent fiduciary to investigate and to report on the Debtors’ extraordinary collapse,” the filing, attributed to U.S. Trustee Andrew Vara, stated.

The request comes as former CEO Sam Bankman-Fried has made numerous media appearances, including a sit-down interview with ABC News. Bankman-Fried appeared in a Twitter Spaces event earlier Thursday where he said he regretted putting FTX US into bankruptcy. 

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