FTX’s committee of unsecured creditors have issued a subpoena to exchange insiders including infamous ex-CEO Sam Bankman-Fried (SBF), who must provide details related to the exchange’s implosion. The formal proceedings appear to be a build-up to what industry onlookers are already aware of.
The committee of unsecured creditors received the US bankruptcy court approval to issue subpoenas to individuals with insider information regarding the inner working of FTX exchange. In five documents filed on Feb. 14, the committee subpoenaed insiders including SBF, Zixiao Wang, Caroline Ellison, Anjan Sahni, Nishad Singh, Russell Capone, and Joseph Bankman.
The named individuals were required to turn in all documentation related to payments received or made to FTX. Moreover, they are also required to provide communications made within the FTX group, insiders, and the Bahamian authority.
The court has ordered the insiders to produce the documentation by Feb. 16.
Specific Subpoena for SBF
FTX founder SBF was specifically named in order to turn in all financial documents related to FTX and Emergent Technology; the latter being a business he ran with former FTX executive Gary Wang.
He has been asked to clearly explain the decision making process behind his resignation as CEO and the appointment of John Ray III as FTX CEO.
In the incoming files, it’s expected that SBF will disclose documents related to FTX’s proposed sale to Binance, and why Binance turned the deal down.
The court also expects SBF to make defensive statements surrounding the decision to claim that FTX US was solvent, even when the organisation was on the precipice of bankruptcy.
SBF is expected to respond to the subpoena with the required documents by Feb. 17.
At the same time, Judge Kaplan has ordered SBF to return to court on Feb. 16 for disregarding orders which prohibited him from using VPN services.
Fraud and speculation
Sam sent a deluge of compromising messages to a VOX journalist at the height of the scandal in mid-November, which all but confirmed the fraud infecting the entire organisation.
Separately, some have speculated that drawn out policy-maker litigation is part of a grand ploy for regulators to delay, and ultimately re-start the exchange as a potential vehicle for issuing US-based Central Bank Digital Currency.
🧵 Here’s how FTX re-org plays out:
> DOJ opens investigation into SBF
> DOJ ties SBF in multi year legal battle
> SEC offers new guidance on crypto deposits/securitization language is intro’d.
> SEC bans SBF from ever trading, or having custody over securities (incl. crypto) https://t.co/DHQrKpSLjC
— CryptoCapo.eth 🪞 (@CancelledPapi) November 17, 2022
Speculation started in November, with the reasoning being that a Chapter 11-bankruptcy is an attempt at restructuring a company, whereas the FTX-Alameda scandal was clearly a case of liquidation of assets – typically followed by Chapter-7 proceedings, per online commentary.
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