U.S. Trustee: FTX was the 'fastest' corporate failure in American history, calls for probe
The United States Trustee handling FTX’s bankruptcy proceedings has referred to the now-defunct exchange as the "fastest big corporate failure in American history," and is calling for an independent probe to look into its downfall.
In a Dec. 1 motion, U.S. Trustee Andrew Vara noted that over the course of eight days in November, debtors "suffered a virtually unprecedented decline in value" from a market high of $32 billion earlier in the year to a several liquidity crisis after a "proverbial 'run on the bank.'"
Vara has called for an independent examination of FTX, stating it was "especially important because of the wider implications that FTX’s collapse may have for the crypto industry."
Independent examiners are typically brought into bankruptcy cases when it is in the interest of creditors, or when unsecured debts exceed $5 million.
This type of examiner has been called in other high-profile bankruptcy cases such as Lehman Brothers, and more recently to look into allegations of mismanagement by Celsius as part of its ongoing chapter 11 case.
"Like the bankruptcy cases of Lehman, Washington Mutual Bank, and New Century Financial before them, these cases are exactly the kind of cases that require the appointment of an independent fiduciary to investigate and to report on the Debtors' extraordinary collapse," the Trustee said.
Vara added that in regards to FTX’s collapse, “the questions at stake here are simply too large and too important to be left to an internal investigation.”
According to the motion, the appointment of an examiner — which requires the approval of the judge — would be in the interest of customers and other interested parties as they would be able to “investigate the substantial and serious allegations of
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