1. FTX lawyers have argued against the appointment of an independent examiner, claiming the costs would exceed $100 million and would not benefit equity holders or creditors.
2. The US Trustee has argued that an examiner is necessary due to the heavy financial losses FTX experienced in a short period of time.
3. The official committee of unsecured creditors has also objected to the appointment of an examiner, claiming it would be a “futile” exercise.
FTX, a once flourishing cryptocurrency exchange, has been brought to its knees due to a liquidity crisis that has had reverberations throughout the entire crypto industry. US Trustee Andrew Vara, tasked with handling FTX’s bankruptcy, has argued for the need of an independent examiner, citing the heavy losses the exchange has experienced in such a short period of time – from a $32 billion market value to a liquidity crisis within 8 days.
However, lawyers representing FTX have argued otherwise. In a Jan. 25 objection motion, they argued that the appointment of an examiner is neither mandatory nor appropriate. They further argued that the results of the investigations would coincide with those done by the committee of creditors, regulatory authorities, law enforcement agencies, and even the new CEO of FTX, John Ray. Therefore, they believe the examiner’s job would not attend to the needs of the creditors, which is locating and recovering the assets of the defunct FTX exchange estate.
The official committee of unsecured creditors has also filed an objection to the appointment of an examiner, claiming it would be a “futile” exercise. They feel that the costs of hiring such an individual would exceed $100 million, and yet not benefit either equity holders or creditors.
The situation has also caught the attention of four senators, who have submitted a letter asking for an independent examiner. Additionally, several states have entered the FTX case, and the US Securities and Exchange Commission (SEC) has asked for an independent examiner in a similar case involving Enron.
As the case continues to unfold, it is yet to be seen if the calls for an independent examiner will be heeded. The outcome of this situation will be of great importance to the crypto industry as a whole and will set a precedent for similar future cases.