According to a report by The Block, the third circuit court of appeals in Philadelphia ruled last Friday (19th) that FTX must cooperate with an independent examiner’s investigation. The U.S. Trustee responsible for overseeing the FTX bankruptcy case had previously requested the appointment of an independent examiner, but this was opposed by FTX’s current CEO and rejected by the Delaware bankruptcy court judge overseeing the bankruptcy proceedings. However, this decision was remanded for reconsideration last Friday. One of the appellate court judges wrote in the precedent opinion that an investigation conducted by the current CEO, John Ray III, was insufficient and an independent examination could reveal new insights into the practices of the crypto industry. Judge Luis Felipe Restrepo wrote that the examiner should not be a party with vested interests or have any connection to the debtor. The judge explained that regarding Ray’s ongoing investigation, there are concerns that FTX employees who may have been involved in fraud could still be within the FTX group, and furthermore, FTX’s legal team at Sullivan & Cromwell was previously a pre-litigation advisor to FTX. Restrepo also wrote that according to the Bankruptcy Code, if the debtor’s debt exceeds $5 million, the appointment of an examiner is necessary, and the FTX case clearly meets this condition. The judge stated that an independent investigation of FTX would be beneficial to the entire cryptocurrency industry. The precedent opinion stated:
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