FTX Debtors Seek Second Phase of Investigation into Crypto Exchange Collapse

• FTX debtors seek authorization for second phase of investigation into US exchange collapse.
• Focus on Sullivan & Cromwell's representation, claims against former shareholders, and balance sheet discrepancies.
• Investigation expected to take 10 weeks and cost $3 million.
• Previous report alleged FTX misconduct, including using customer funds to cover bank issues.
• Former FTX CEO claimed solvency, but evidence suggests otherwise.
• Objections due by June 24, hearing scheduled for July 17.

Summary :
FTX debtors in possession have filed a motion to authorize a second phase of investigation into the collapse of the US crypto exchange. The investigation will focus on three major issues: the extent of legal firm Sullivan & Cromwell's representation of Sam Bankman-Fried, potential claims against former shareholders of Ledger Holdings who sold their interests prepetition to FTX US, and the frequency and magnitude of the holes in FTX US's balance sheet. The investigation is expected to take around 10 weeks and cost approximately $3 million. This second phase follows a previous report that made allegations about FTX trying to pay off whistleblowers and using customer funds to address capital issues. It also highlighted evidence of FTX US having insufficient assets and included cash in its reconciliations that shouldn't have been included. Former FTX chief exec Bankman-Fried's claims of FTX US solvency seem to be contradicted by the ongoing investigation. Objections to the motion are due by June 24, with a hearing scheduled for July 17.

Sources :

- Protos