• Tue. May 28th, 2024

FTX Opposes New Bankruptcy Investigation Into SBF’s Connections

Jan 26, 2023

The US Department of Justice (DOJ) had submitted a request for conducting an independent investigation into the collapse of the once-dominant crypto exchange.

This has resulted in an objection from FTX, which said that the DOJ was already doing a wide-ranging probe, including the family members of Sam Bankman-Fried, the co-founder of FTX.

The objection

Late on Wednesday, FTX submitted a court filing in Delaware where the bankruptcy case is unfolding in which it objected to the proposed review of the DOJ.

The company said that it would only lead to delay and add to the cost of its bankruptcy case.

It acknowledged that its past conduct may have included irregularity, mismanagement, incompetence, dishonesty, misconduct, and fraud.

But, it added that the new management of the company was already probing its previous wrongdoing, as were law enforcement agencies and creditors.

The Chapter 11 proceedings in Wilmington, Delaware, are being overseen by bankruptcy Judge John Dorsey.

As part of its own probe, FTX requested the judge to help it in obtaining documents from SBF, his family members, and other people who had knowledge of the company’s transactions, which used ‘stolen and misappropriated’ funds.

The request

FTX said that these transactions included a real estate purchase in the Bahamas worth $16.7 million under the name of Barbara Fried and Joseph Bankman, the parents of the FTX co-founder.

The company is also seeking information about the political donations made by a political action committee called Mind the Gap which was founded by Barbara Fried.

They are also looking into the donations made by an advocacy organization named Guarding Against Pandemics, which had been founded by Gabriel Bankman-Fried, SBF’s brother.

According to FTX, the headquarters of Mind the Gap, which is worth millions of dollars and located in Washington D.C., had been bought with misappropriated funds.

Other details

Once one of the top crypto exchanges globally, FTX sent the crypto market reeling in November when it filed for bankruptcy.

Almost 9 million investors and customers were left dealing with losses of billions of dollars in the wake of its collapse.

The bankruptcy watchdog of the US Department of Justice (DOJ), has demanded that an independent investigation be conducted into the downfall, which has been supported by a group of bipartisan US senators.

John Ray, the new CEO of FTX, also oversaw the bankruptcy of Enron as well as Residential Corp and had worked with court-appointed examiners on both.

FTX said that was ready to testify that a cost of $150 million had been incurred in the two cases and it had not offered creditors many benefits.

The official committee of creditors of FTX also joined the company in opposing the request for appointing an examiner.

A list of creditors was also filed in court late on Wednesday by the company, which highlighted that the exchange owed money to government agencies and financial watchdogs from multiple countries.

These include Switzerland, Japan, and the United States. It also owes companies like crypto giant Binance as well as Airbnb Inc., Coinbase, Netflix, and Apple.

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