Following a request from FTX lawyers to subpoena FTX co-founder Sam Bankman-Fried (SBF) and members of his family, the U.S. Trustee appointed by the Department of Justice has filed an opposition to the request. The U.S. Trustee explained that the motion would duplicate the efforts of the federally appointed independent examiner.
U.S. Trustee Argues for Limiting Duplicative Efforts in FTX Bankruptcy Investigation
About a week ago, lawyers representing FTX debtors filed a motion with the bankruptcy court to subpoena and question Sam Bankman-Fried’s (SBF) inner circle and family members. The FTX attorneys stated they want to question SBF, his parents Joseph Bankman and Barbara Fried, his brother Gabriel Bankman-Fried, and four members of the FTX/Alameda executive teams. The legal team noted that several of these individuals were allegedly not cooperating with the bankruptcy process.
After the request was filed, the U.S. Trustee appointed by the Department of Justice (DOJ) filed an objection motion against the subpoena proposal. Andrew Vara, the U.S. Trustee in the FTX bankruptcy case, was added to the proceedings in December 2022. In the opposition filing, Vara argued that the subpoenas and questioning could be a waste of time and result in duplicative investigative efforts. Vara emphasized that the bankruptcy court has an “obligation to prevent unnecessary expenditures in the administration of an estate.”
“To avoid duplication of effort, and to prevent unnecessary expenditures in the administration of these estates, the U.S. Trustee respectfully requests that if the court orders the appointment of an examiner, then the court establish the scope of the Rule 2004 relief contemporaneously with the scope of the examiner’s investigation,” the U.S. Trustee’s filing details. Vara’s filing with the bankruptcy court concludes:
Wherefore, the U.S. Trustee respectfully requests that the court determine the investigative scope of the motions contemporaneously with the scope of any examiner’s investigation, and grant any such other and further relief that the court deems just and proper.
Vara believes the examiner is justified in this case, which involves a large amount of money, and three members of Congress have called for an independent examiner. Senators Elizabeth Warren (D-Mass.), John Hickenlooper (D-Colo.) and Cynthia Lummis (R-Wyo.) have urged Judge John Dorsey of the Bankruptcy Court of the District of Delaware to support appointing an independent examiner. The U.S. senators insisted that an “objective investigation of the activities that led to the collapse of FTX” is necessary.”
What do you think should be the next step in the FTX bankruptcy case to ensure an objective and effective investigation into the collapse of the company? Let us know your thoughts about this subject in the comments section below.
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Author: Jamie Redman