The Department of Justice requested that an independent examiner be appointed to look into allegations of fraud, dishonesty and incompetence after the collapse of Sam Bankman-Fried. It's possible that the DOJ could use it to gather evidence.
Andrew Vara told the court that the events leading up to FTX's collapse merited a quick and thorough examination.
Vara believes that Bankman- Fried and other managers may have mismanaged FTX.
The DOJ seems to be using the bankruptcy process as a way to get evidence, according to a former federal prosecutor.
He said that the Department of Justice and the bankruptcy estates work together to make victims whole. A Victims Fund with money going to those that lost money and what the Department of Justice potentially will view as a fraud will likely be part of the asset recovery plan.
It shows a level of interest and attention that should be troubling to Mr Bankman- Fried.
Vara said an examination is preferable to an internal investigation because of the wider implications of the company collapsing.
The political donations that FTX executives were involved in on both sides of the aisle could be a factor in the case.
There have been campaign donations on both sides of the aisle from FTX.
It is out of caution to make sure that whatever is happening is done independently.
A bankruptcy examiner is usually appointed. There was a person who was in charge of thecryptocurrencies bankruptcy process.
An examiner is required for bankruptcies above a certain size. According to the U.S. Trustee, an examiner is required because FTX's debts exceed $5 million.
In some cases, the loss of hundreds of millions of dollars was suffered by FTX's creditor. BlockFi filed for Chapter 11 protection in New Jersey.