District judge refers FTX examiner appointment to Court of Appeals

A Delaware District Judge referred the appointment of an independent investigator to the U.S. Third Circuit Court of Appeals on Tuesday regarding the collapse of crypto exchange FTX. The government has joined a group of Senators from both parties in calling for an independent inquiry into Sam Bankman-Fried’s empire’s fall. FTX’s new management warns that the probe could cost the estate approximately $100 million in legal fees. District Judge Colm F. Connolly ruled that the matter was out of his hands and that the law required him to refer the case upwards if the U.S. Trustee, a branch of the Department of Justice (DOJ) concerned with bankruptcy, requests it, and if there is no dispute over facts. John Dorsey, a judge from a bankruptcy court, declined to appoint an examiner into the case in March, claiming that it could represent a costly delay to the wind-up of the network of around 100 companies.

FTX filed for bankruptcy in November, and Bankman-Fried, FTX’s former chief executive officer, is battling DOJ charges, including wire fraud. Filings by his successor John J. Ray III have hinted at a reboot of the exchange’s activity. In January, independent examiner Shoba Pillay found that Celsius had used new customer funds to pay for withdrawals, after she was asked in September to investigate whether the bankruptcy crypto lender had operated as a Ponzi scheme.

Read more: U.S. Criminal Charges Against Sam Bankman-Fried Don’t Warrant Dismissal, Prosecutors Say

Edited by Nikhilesh De.