US Government seeks FTX Inquiry in Court of Appeals Latest news

The US Government has requested an independent investigation into the now-defunct cryptocurrency exchange FTX. On Tuesday, the U.S. Third Circuit Court of Appeals was asked to consider the government’s push.

Delaware District Judge Colm F. Connolly ruled that it was not up to him to decide whether the case should be referred to the appeals court. The ruling stated that this decision only lies with the U.S. Trustee, a branch of the Department of Justice (DOJ), as long as they have requested it and there is no “question of fact” involved.

The ruling further noted that “the facts are not in dispute,” and that “No one contests that the Trustee requested an examiner here […].” Therefore, the judge was compelled to grant the Trustee’s motion.

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The government’s request for an investigation into FTX’s bankruptcy came after both Democratic and Republican Senators called for an inquiry into the collapse of FTX in January. They argued that a “thorough, objective investigation of the activities that led to the collapse of FTX” was necessary.

Despite warnings from the new FTX management that an investigation could cost the bankruptcy estate as much as $100 million in legal fees, the inquiry was still called for. Additionally, bankruptcy judge John Dorsey declined to appoint an examiner for the inquiry in March, citing the cost and time required.

FTX filed for bankruptcy in November 2022, and its CEO, Sam Bankman-Fried, was arrested in December. If convicted on all charges against him, the former CEO could face over 100 years in prison.

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