Appointing an independent examiner in the FTX bankruptcy proceedings “would create an increased risk of further loss through inadvertent disclosures or hacking,” Judge John Dorsery said in a hearing on Wednesday.
Dorsey, who’s overseeing the crypto exchange’s Chapter 11 case in Delaware, denied a motion from the U.S. Trustee to appoint an examiner. He cited concerns about security and cost, echoing arguments made independent-examiner-assets-risk” data-ylk=”slk:last week” class=”link “last week by attorneys representing FTX, the creditor committee, and the joint provisional liquidators.
When a bankruptcy judge appoints an independent examiner, debtors have to pay the bill. That means FTX would have had to pay for an investigation that Dorsey estimated could have cost more than $100 million.
“It is important to keep in mind that while we talk about the cost of an investigation being borne by the debtors, we are actually talking about the cost being borne by the creditors,” Dorsey said during the hearing. “Every dollar spent in these cases on administrative expenses is $1 less to the creditors.”
To bolster its argument against an examiner, the FTX legal team had newly appointed FTX CEO