• FTX lawyers claim an independent examiner would be a waste of $100 million without benefiting equity holders or creditors.
• The US Trustee Andrew Vara has argued that an independent examiner is necessary due to the liquidity crisis FTX experienced.
• The official committee of unsecured creditors has objected to the appointment of an independent examiner, claiming it would be futile.
FTX, a cryptocurrency exchange, recently experienced a heavy downfall from a $32 billion market value to a liquidity crisis. This insolvency has had considerable implications for the entire crypto industry and as a result, US Trustee Andrew Vara was tasked with handling FTX’s bankruptcy and proposed the appointment of an independent examiner. However, lawyers representing FTX have argued that an examiner is not only unnecessary, but would be a waste of resources. They claim that the results of the investigations would coincide with those done by the committee of creditors, regulatory authorities, law enforcement agencies, Congress, and the new FTX CEO, John Ray.
The official committee of unsecured creditors has also filed an objection motion, claiming that the appointment of an examiner would be futile. This is because their job would not attend to the needs of the creditors, which is locating and recovering the assets of the defunct FTX exchange estate. Furthermore, the committee believes that the cost of the examiner would be too high, and would not benefit equity holders or creditors in any way.
The situation has prompted four Senators to submit a letter asking for an Independent Examiner. Meanwhile, several states have entered the FTX case to lend their support for an Examiner. The Securities and Exchange Commission (SEC) also asked for an Independent Examiner in the Enron case, and it is yet to be seen if they will do the same in this case.
Overall, the appointment of an independent examiner is a highly contested issue, with FTX lawyers, the committee of unsecured creditors, and the US Trustee all having different opinions on the matter. It remains to be seen what will happen, as this decision could have major implications for the crypto industry.