US Government’s Push for FTX Inquiry Reaches Court of Appeals – Here’s the Latest

The US Government’s push for an independent inquiry of the now-bankrupt crypto exchange FTX was on Tuesday referred to the U.S. Third Circuit Court of Appeals.

The ruling, made by Delaware District Judge Colm F. Connolly, argued that the question of whether the case should be referred to the appeals court was not up to the judge to decide.

This is true as long as the U.S. Trustee – a branch of the Department of Justice (DOJ) – has asked for it, and there is no “question of fact” involved, the ruling said.

In this case, “the facts are not in dispute,” Judge Connolly further wrote, noting that “No one contests that the Trustee requested an examiner here […].”

“Accordingly, I have no choice but to grant the Trustee’s motion,” the judge added.

The government’s push comes after a group of both Democratic and Republican Senators in January called for an inquiry into FTX’s bankruptcy, arguing that a “thorough, objective investigation of the activities that led to the collapse of FTX” was needed.

The call for an inquiry into the FTX collapse was made despite warnings from the new FTX management that such an investigation could cost the bankruptcy estate as much as $100 million in legal fees.

It also comes despite the fact that bankruptcy judge John Dorsey in March declined to appoint an examiner for the inquiry on the grounds that it would be too expensive and time-consuming.

FTX filed for bankruptcy in November of 2022, and the exchange’s CEO, Sam Bankman-Fried, was arrested in December.

The former exchange CEO could face over 100 years in prison if convicted on all charges against him.