related entities


FTX Bankruptcy: Texas, California, and New Jersey Join Call for Independent Examiner

  • February 25, 2023

A growing chorus of regulators wants an independent examiner appointed to review the financial statements, or lack thereof, in the FTX bankruptcy proceedings.

“Texas, among several other state and federal regulators, is currently investigating the Debtors and their related entities for violations in connection with their transaction of business in Texas and with Texas account holders,” wrote attorney Roma Desai on behalf of Texas Attorney General Ken Paxton.

The statement from the Texas attorney’s office follows similar motions from Wisconsin and Vermont regulators. The new court filing on Wednesday included letters of support from banking and securities officials in a handful of other states: Alaska; Arkansas; California; Florida; Hawaii; Idaho; Illinois; Kentucky; Maine, Maryland, New Hampshire, New Jersey, North Carolina, Oklahoma, Tennessee, and D.C..

If an examiner is appointed in the FTX case, it won’t be without some precedent.

Earlier this week the independent examiner who dug through bankrupt crypto lender Celsius released their 689-page report, concluding that problems at the company “dated back to at least 2020.”

The downfall of FTX

FTX and its related entities, including trading desk Alameda Research, filed for bankruptcy on November 11. Days later, newly appointed FTX CEO John Ray III, who’s overseeing the company’s restructuring, wrote in his first day declaration that the lack of corporate governance at the insolvent crypto exchange trumped anything he’d ever seen. He called the former leadership team, led by FTX founder Sam Bankman-Fried, “inexperienced, unsophisticated and potentially compromised.”

Although FTX’s restructuring team has maintained that it can untangle the mess it’s been left with, the U.S. Trustees appointed to oversee its bankruptcy proceedings aren’t convinced.

The U.S. Trustee, appointed by the Department of Justice to oversee FTX’s bankruptcy case, filed a motion to have an examiner appointed to “investigate the substantial and serious allegations of

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