ftx: FTX Opposes New Bankruptcy Investigation As It Explores Bankman And Freed Links

FTX objected to the US Department of Justice’s request for an independent investigation into the collapse of the once-famous cryptocurrency exchange, saying it was already conducting a wide-ranging investigation involving members of the FTX founder’s family. Sam Bankman-Fried.FTX said in a Wilmington, Delaware lawsuit late Wednesday night that the Justice Department’s proposed scrutiny would only increase costs and delay its review. bankruptcy case.

FTX acknowledged “fraud, dishonesty, incompetence, misconduct, mismanagement and wrongdoing” in its past conduct, but said its previous wrongdoings are already under investigation by the company’s new management, its creditors and law enforcement.

As part of its own investigation, FTX asked U.S. Bankruptcy Judge John Dorsey, who oversees the Chapter 11 litigation, to help protect documents from Bankman-Fried, his family members, and other insiders with information about FTX transactions that used “improperly embezzled and stolen” funds. These deals, he said, include a $16.7 million purchase of Bahamas real estate in the name of Bankman-Fried’s parents, Joseph Bankman and Barbara Fried.

FTX is also seeking information on political donations from Mind the Gap, a political action committee founded by Barbara Freed, and Guarding Against Pandemics, an advocacy organization founded by Sam Bankman-Freed and his brother Gabriel. Bankman Fried. FTX said Mind the Gap’s multi-million dollar headquarters in Washington, D.C. was acquired with embezzled funds.

Bankman-Fried and his family members could not be contacted for comment.

FTX, once among the top crypto exchanges in the world, rocked the sector in November by filing for bankruptcy, leaving about 9 million customers and other investors facing total losses of billions of dollars.

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The US Department of Justice Bankruptcy Service has called for an independent investigation into its collapse, a request that has received support from a bipartisan group of US senators. New FTX CEO John Wray, who worked with court-appointed auditors while leading Enron Corp and Residential Capital through bankruptcy, is willing to testify that the auditors in the two cases cost $150 million and provided “minimum” benefits to creditors, according to FTX. .

The official committee of FTX creditors joined the company in opposing the appointment of an auditor.

FTX also filed a new list of creditors in bankruptcy court Wednesday night, revealing that it owes money to financial watchdogs and government agencies from the US, Japan and Switzerland, as well as companies including Airbnb Inc and crypto giant Binance.

Airbnb and Binance did not immediately respond to a request for comment.

The US Treasury Department’s Financial Crime Enforcement Network (FinCEN) and the US Internal Revenue Service (IRS) are among those FTX owes money to, according to a new list of creditors. He did not provide details on the nature or amount of the money due.

Swiss market watchdog FINMA and Japan’s regulator FSA were also listed in the 116-page document.

A FINMA spokesman said he could not explain why he appeared on the list of creditors. The spokesperson added that the watchdog was not an FTX customer and did not operate on its platforms.

FinCEN and the IRS declined to comment. Japan’s FSA, contacted after business hours, did not immediately respond to a request for comment.

Last year, FTX said it owed nearly $3.1 billion to its top 50 creditors. In January, Dorsey allowed FTX to keep the names of 9 million of its customers private for three months.

Sam Bankman-Fried, who is accused of stealing billions of dollars from FTX clients to pay off debt incurred by his cryptocurrency-focused hedge fund, has pleaded not guilty to the fraud charges. He is due to appear in court in October.

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