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Justice Dept. requests independent review of FTX collapse

The Justice Dept. has requested an independent investigation into the collapse of FTX, formerly the second-largest cryptocurrency trading platform in the world. Miami-Dade county is seeking a new naming partner for the FTX Arena, shown here. Photo by B137/Wikimedia Commons
The Justice Dept. has requested an independent investigation into the collapse of FTX, formerly the second-largest cryptocurrency trading platform in the world. Miami-Dade county is seeking a new naming partner for the FTX Arena, shown here. Photo by B137/Wikimedia Commons

Dec. 2 (UPI) -- The Department of Justice has requested an independent review of the circumstances leading to the implosion of the cryptocurrency exchange FTX, which filed for bankruptcy in November after failing to maintain adequate liquidity to match investments.

"The questions at stake here are simply too large and too important to be left to an internal investigation," U.S. Trustee Andrew Vara said in a filing in Delaware federal bankruptcy court Thursday.

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John Ray III, who replaced FTX founder Sam Bankman-Fried as CEO in November, is conducting an internal investigation into the company's collapse. Ray previously oversaw the return of some investor assets during the liquidation of Enron.

FTX was the worlds second-largest cryptocurrency trading platform until it was reveled that it lacked the funds to match investments.

"Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here," Ray wrote in FTX's bankruptcy filing in November.

While the Department of Justice said it did not dispute Ray's "qualifications, competence or good faith," it believes his role in the company may prevent him from representing the interests of all investors.

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"An examiner could -- and should -- investigate the substantial and serious allegations of fraud, dishonesty, incompetence, misconduct and mismanagement," Vera wrote in Thursday's filing.

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