US trustee objects to FTX’s planned sale of LedgerX and other units: Reuters

A U.S. trustee  filed an objection to FTX’s plan to sell the company’s LedgerX as well as FTX units in Europe and Japan.

FTX filed for bankruptcy protection in November, amid mounting debt from failed investments and alleged mismanagement of funds by senior executives within the company. 

The company had stated previously that it planned to sell its LedgerX, FTX Japan and FTX Europe businesses. However, U.S. Trustee Andrew Vara filed an objection to these sales on Jan. 7, according to Reuters. 

In his filing, the federal bankruptcy watchdog requested that an investigation be conducted prior to the sale of the units in order to ascertain whether they have access to information related to FTX’s bankruptcy proceedings.

“The sale of potentially valuable causes of action against the Debtors’ directors, officers and employees, or any other person or entity, should not be permitted until there has been a full and independent investigation into all persons and entities that may have been involved in any malfeasance, negligence or other actionable conduct,” the filing said, according to Reuters.

As a U.S. trustee, Vara is a part of the Department of Justice, which supervises bankruptcy proceedings in the United States and has a duty to ensure that bankrupt entities are not engaging in activities that would be detrimental for creditors or others with interests in the case.

The development comes after former FTX CEO Sam Bankman-Fried pleaded not guilty last week to criminal charges that he cheated investors and caused them financial loss through his actions.

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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