Andrew Vara, the United States Trustee tasked with resolving the FTX bankruptcy, slammed the company as the “fastest big corporate failure in American history,”
The executive has urged regulators to open an independent probe to investigate the company’s collapse, reports showed.
He said in a motion on Thursday that an eight-day period in November market where debtors “suffered a virtually unprecedented decline in value.”
He cited rapid shifts in the market from $32 billion in early 2022 to an unprecedented liquidity crunch which triggered massive bank runs and later, exchange collapses.
“Was this an unsuccessful business or a successful fraud? In other words, is there anything to save here?”
— Brady Dale (@BradyDale) December 2, 2022
Andrew R. Vara
United States Trustree
In a motion to appoint an independent excaminer in the @FTX_Official bankruptcy case
He said in a statement: The result is what is linekly the fastest big corporate failure in American history, resulting in these ‘free fall’ bankruptcy cases.
Independent Investigation Urged for FTX
Acording to Vara, regulators needed to open an independent investigation for FTX, similar to other major high-profile cases, adding: “[it is] especially important because of the wider implications that FTX’s collapse may have for the crypto industry.”
He continued: “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.”
Concluding, he stated questions regarding he FTX collapse were “simpliy too large and too important” for internal investigations to tackle.
He stated such authoritise could probe the “substantial and serious allegations of fraud, diskhonest, incompetence, misconduct, and mismangement” committed by FTX, Alameda Research, and its former chief executive Sam Bankman-Fried.
Other major concerns include bank runs from customers, reclaiming losses from the exchange, and additional issues involved in the exchange’s collapse, among others.
The Aftermath of the FTX Collapse
According to current FTX chief executive John J Ray III, the firm had concealed its mishandling of customer funds with software and “a complete abscence of trustworthy financial information” that was concentrated “in the hands of a very small group of inexperience, unsophisticated” individuals.
Other authorities, including the Bahamian government and numerous intelligence agencies in the US have launched investigations against FTX after it collapsed on 11 November.
Organisations such as the US Attorney’s Office for the Southern District of New York and the Securities and Exchange Commission (SEC) have requested further information on the disgraced exchange platform.
Other global governments, including Australia, Singapore, South Korea, the United States, and many others have intervened in the aftermath of FTX.
Many governments have demanded expanded powers and controls over cryptocurrency markets with tighter regulations. Others have called for stricter licence requirements for cypto companies operating in their respective nations.
