FTX has objected to a U.S. Department of Justice request for an independent investigation into the once-prominent crypto exchange's collapse, saying it is already conducting a wide-ranging probe that includes family members of FTX founder Sam Bankman-Fried.
FTX said in a court filing in Wilmington, Delaware, late on Wednesday that the DOJ's proposed review would only add cost and delay to its bankruptcy case. FTX acknowledged "fraud, dishonesty, incompetence, misconduct, mismanagement, and irregularity" in its past conduct, but said that its previous wrongdoing is already being probed by the company's new management, its creditors and law enforcement agencies.
As part of its own investigation, FTX asked U.S. Bankruptcy Judge John Dorsey, who is overseeing its Chapter 11 proceedings, to help it secure documents from Bankman-Fried, members of his family and other insiders with information about FTX transactions that used "misappropriated and stolen" funds. These transactions, it said, include a $16.7 million Bahamian real estate purchase under the name of Bankman-Fried's parents, Joseph Bankman and Barbara Fried.
FTX is also seeking information about political donations by Mind the Gap, a political action committee founded by Barbara Fried, and Guarding Against Pandemics, an advocacy organization founded by Sam Bankman-Fried and his brother, Gabriel Bankman-Fried. FTX said Mind the Gap's multimillion-dollar Washington, D.C., headquarters was purchased with misappropriated funds.
Bankman-Fried and members of his family could not immediately be reached for comment.
FTX, once among the world's top crypto exchanges, shook the sector in November by filing for bankruptcy, leaving an estimated 9 million customers and other investors facing total losses in the billions of dollars.
The U.S. Department of Justice's bankruptcy watchdog has called for an independent investigation into its collapse, a request that received backing from a bipartisan group of U.S. senators.
FTX’s new CEO, John Ray, who worked with court-appointed examiners while leading Enron Corp and Residential Capital through bankruptcy, is prepared to testify that examiners in those two cases cost a combined $150 million and provided "minimal" benefits to creditors, FTX said.
FTX's official committee of creditors joined the company in opposing the appointment of an examiner.
FTX also on Wednesday night filed a new list of creditors in bankruptcy court, showing that it owes money to financial watchdogs and government agencies from the United States, 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 U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) and U.S. Internal Revenue Service (IRS) are among those owed money by FTX, according to the new list of creditors. It did not give details of the nature or amount of monies owed.
Swiss markets watchdog FINMA and Japan's FSA regulator were also listed in the 116-page document.
A FINMA spokesperson said it could not explain why it had appeared on the list of creditors. The watchdog was not a client of FTX and had not acted on its platforms, the spokesperson added.
FinCEN and the IRS declined to comment. Japan's FSA, contacted outside business hours, did not immediately respond to a request for comment.
FTX said last year it owed its 50 biggest creditors nearly $3.1 billion. Dorsey in January allowed FTX to keep secret the names of 9 million of its individual customers for three months.
Sam Bankman-Fried, who has been accused of stealing billions of dollars from FTX customers to pay debts incurred by his crypto-focused hedge fund, has pleaded not guilty to fraud charges. He is scheduled to face trial in October.
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