The Department of Justice today filed a motion with the United States Bankruptcy Court in Delaware requesting the appointment of an independent examiner to investigate the exchange’s collapse and subsequent bankruptcy.
“Like the bankruptcies of Lehman, Washington Mutual Bank and New Century Financial, these cases are precisely the type of case that requires the appointment of an independent trustee to investigate and report on the extraordinary collapse of debtors.” said the regulator.
The request cites testimony from Delaware Bankruptcy Court-appointed CEO John Ray, who strongly criticized the management of FTX Exchange and Alameda Research’s Sam Bank-Fried.
“The issues at stake here are very large and important which should be left for internal investigation,” the agency said.
In those statements from Ray, Momentum highlighted that, over the course of eight days in November, FTX “suffered an unprecedented decline in value from a peak market value of $32 billion earlier this year.”
See More: Nash21 And Token City Promote Tokenization Of The Economy
According to Ray’s testimony, a severe liquidity crunch occurred, Amid revelations of multiple corporate failures and misappropriation of client fundsWhich was provided by “cloaking software”, the app states.
The result is perhaps the fastest major corporate failure in American history, as seen in these “free fall” bankruptcy cases. Nearly one million debt creditors around the world, outside of investors and regulators, are demanding answers about what happened and how it happened. US Department of Justice Motion.
On November 21, Moody’s warned that it is considering downgrading another cryptocurrency exchange, Coinbase. And he spoke of “growing problems for all firms operating in the sector: a sharp reduction in the volume of crypto trading and customer flight”.
FTX Today is not Lehman Brothers on September 15, 2008, whose fall caused a domino effect that led to the Great Recession.
The Delaware District Bankruptcy Court will hear the FTX case on December 16. to be broadcast live10 a.m. Eastern Time.