In a recent judgment in the U.S. District Court for the District of Delaware, Colm F. Connolly, a US district judge has referred a motion featuring the request for the appointment of an independent examiner for the defunct cryptocurrency exchange FTX to the US Third Circuit Court of Appeals.
This move comes as a result of the ongoing legal proceedings against the platform and will allow the examiner to investigate FTX’s trading practices and determine whether or not they have engaged in any illegal activities. The Judge’s decision to refer the motion to the court of appeals means that the case will now be reviewed by the higher court.
Likewise, the appointment of an independent examiner will ensure that the investigation is carried out by a neutral third party who has no vested interest in the outcome of the case. As such, will help to ensure that the investigation is fair and impartial.
Independent Examiners Tasked with Ensuring Fairness on the FTX Case
The appointment of an independent examiner is not uncommon in legal proceedings. It is often used in cases where there is a need for an objective investigation into the actions of a company or individual. Particularly, this is important in cases involving allegations of fraud or other illegal activities.
Instructively, if allowed, the examiner’s role would be to evaluate the events that led to the collapse of the exchange, assess the firm’s internal operations, and determine possible potential misconduct or mismanagement that may have led to the downfall. Moreso, this step by the judge is an important step to ensuring that justice is served and that any wrongdoing is brought to light.
FTX as an exchange is yet to comment on the judge’s decision to refer the motion to the court of appeals. Recall that in January, FTX lawyers opposed the appointment of an independent examiner. The firm argued that an investigation into FTX’s collapse by an examiner could cost the firm over $100 million without providing any benefits to creditors or equity holders.
Meanwhile, US prosecutors have urged the court to continue with all charges against Sam Bankman-Fried, the exchange’s former CEO for his handling of the firm before its bankruptcy. The prosecutors allege that Bankman-Fried and his team used an illegal trading strategy to manipulate the market and make profits and should therefore be held accountable.
