• FTX lawyers claim that an independent examiner would cost the company more than $100 million without benefiting equity holders or creditors.
• The official committee of unsecured creditors has also objected to the appointment of an independent examiner, claiming it would be a ‘futile’ move.
• US Trustee Andrew Vara has argued that an independent examiner is needed due to the heavy downfall of FTX from a $32 billion market value to a liquidity crisis over eight days.
FTX, a fallen exchange, has recently experienced a heavy downfall from a $32 billion market value to a liquidity crisis over eight days. US Trustee Andrew Vara, who was tasked to handle FTX’s bankruptcy, has argued that there is a dire need for an independent examiner due to the implications this insolvency has had for the whole crypto industry. However, FTX lawyers have claimed that the appointment of an examiner is neither mandatory nor appropriate, as the results of the investigations would coincide with those done by the committee of creditors, regulatory authorities, law enforcement agencies, Congress, and even the new FTX CEO, John Ray. The lawyers have claimed that the examiner would cost the company more than $100 million without benefiting equity holders or creditors.
In addition, the official committee of unsecured creditors has also filed an objection motion, claiming that the appointment of an independent examiner would be a ‘futile’ move. They argued that the examiner would not attend to the needs of the creditors, which is locating and recovering the assets of the defunct FTX exchange estate.
In response to this, four Senators have submitted a letter asking for an independent examiner and several states have entered the FTX case. Furthermore, the SEC asked for an independent examiner in the Enron case, so it will be interesting to see if they will make a statement in this case.
Regardless of the outcome, this insolvency has had considerable implications for the whole crypto industry and it remains to be seen how it will be resolved.