US Trustee in FTX Bankruptcy Case Objects to Subpoena Request Appointed by DOJ

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Sam Bankman-Fried (SBF), a co-founder of FTX, and members of his family have been named as subjects of a subpoena request made by FTX attorneys. The U.S. Trustee assigned by the Department of Justice has submitted an objection to the request. The move, according to the U.S. Trustee, would duplicate the work of the independent examiner who was appointed by the government.

U.S. Trustee Argues for Limiting Duplicative Efforts in FTX Bankruptcy Investigation
A motion to summon and cross-examine Sam Bankman-(SBF) Fried’s close friends and family members was submitted to the bankruptcy court about a week ago by attorneys acting on behalf of FTX debtors. The FTX lawyers claimed they want to examine SBF, his brother Gabriel Bankman-Fried, his parents Joseph Bankman and Barbara Fried, and four members of the FTX/Alameda executive teams. A number of these people were apparently not cooperating with the bankruptcy procedure, according to the legal team.

The U.S. Trustee, who was chosen by the Department of Justice (DOJ), filed an objection motion in response to the request. In December 2022, Andrew Vara—the U.S. Trustee in the FTX bankruptcy case—became a party to the proceedings. Vara stated in the opposition document that the subpoenas and questioning might be a waste of time and lead to redundant investigative operations. The bankruptcy court, according to Vara, has a “responsibility to prevent wasteful costs in the administration of an estate.”

According to the U.S. Trustee’s filing, “to avoid duplication of effort and to prevent unnecessary expenditures in the administration of these estates, the court shall establish the scope of the Rule 2004 relief contemporaneously with the scope of the examiner’s investigation,” if the court orders the appointment of an examiner. In sum, Vara’s bankruptcy court filing reads as follows:

Therefore, the U.S. Trustee respectfully asks that the court award any additional relief it deems just and appropriate while also determining the motions’ investigative scope concurrently with the extent of any examiner’s probe.

In this case, which involves a significant amount of money, Vara thinks the examiner is justified, and three members of Congress have called for an independent examiner. Senators John Hickenlooper (D), Cynthia Lummis (R), and Elizabeth Warren (D) of Massachusetts have encouraged Judge John Dorsey of the Bankruptcy Court of the District of Delaware to endorse the appointment of an independent examiner. The U.S. senators stated that it is essential to conduct a “objective investigation of the events that contributed to the collapse of FTX.”

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