The Chair of the U.S. Securities and Exchange Commission (SEC) says that the Federal Bureau of Investigation (FBI) and Homeland Security are looking into last week’s hack of the regulatory body’s X account. In a new statement, SEC Chairman Gary Gensler says that the law enforcement agencies are now involved in the investigation of last […]
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US Senator Kirsten Gillibrand is reportedly attempting to convince her fellow Democrats to support legislation to increase regulatory clarity for cryptocurrencies. In a new interview with Fortune, the New York Senator says that she’s hopeful that she can have her bi-partisan cryptocurrency bill heard by a key senate committee. Gillibrand introduced the bill last year […]
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Bankruptcy judge John Dorsey called the bipartisan letter “inappropriate,” and says he won’t take it into account in his decision for an independent examiner.
The judge handling FTX’s bankruptcy has reportedly slammed a joint letter from four United States senators calling for an independent examiner in the case.
As reported by Cointelegraph, the senators sent a letter on Jan. 9 highlighting concerns about the ties between FTX and Sullivan & Cromwell LLP, which as the lead law firm in the bankruptcy proceedings would be tasked with scrutinizing alleged past wrongdoing by the exchange.
However, during a Jan. 11 hearing, Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware called the letter “inappropriate ex parte communication” thathe would not take into account in his decision.
“I will make my decisions on the matters based only upon admissible evidence and the arguments presented in open court,” he said during the hearing, according to a Law360 report on Jan. 11.
Ex parte refers to an action taken by one party in a legal proceeding without participation from the opposing party.
The letter was sent to Judge Dorsey on Jan. 9 by a bipartisan group of senators — John Hickenlooper, Thom Tillis, Elizabeth Warren and Cynthia Lummis — questioning the appointment of Sullivan & Cromwell and supporting a motion for the appointment of an independent examiner.
The motion was filed by the U.S. Trustee on Dec. 12.
In the letter, the senators noted that the law firm has previously provided FTX with legal advice and that members of the law firm had left to take positions at FTX, prompting one of the senators to suggest there could be a conflict of interest.
Get this: FTX’s legal advisors *pre-collapse* want to be appointed to oversee investigations INTO the collapse.
— Senator John Hickenlooper (@SenatorHick) January 10, 2023
I’m no legal expert, but that sounds like a conflict of interest. With @SenThomTillis @SenWarren @SenLummishttps://t.co/iz3k9yP1uT
A spokesperson from Sullivan & Cromwell told Cointelegraph that the law firm met the definition of “disinterested” under the U.S. Bankruptcy Code and had “never served as primary outside counsel to any FTX entity."
Related: FTX customers names will remain sealed for now, rules judge
The judge’s dismissal of the senators’ letter does not mean that he will reject the motion to appoint an independent examiner or approve Sullivan & Cromwell as counsel to FTX.
The judge will still need to review the objection to the Sullivan & Cromwell appointment from FTX creditor Warren Winter, whose representatives filed an amended objection on Jan. 10 claiming that the appointment could undermine the public’s faith in the bankruptcy process and the law firm itself was a “target for investigation” regarding its own “potential liability.”
Independent examiners are often appointed by bankruptcy courts to investigate details of complex cases brought before them and are able to present information to the courts from an independent point of view.
They have been appointed in other high-profile bankruptcy cases such as Lehman Brothers during the subprime mortgage crisis and the crypto exchange Celsius.
Crypto bull and Shark Tank investor Kevin O’Leary says there’s one opportunity in digital currencies that outshines the rest. The venture capitalist tells his 895,000 subscribers that payment systems present the biggest possible opportunity in the space, but that regulation needs to pass before it can be seized. “Payment systems are the biggest opportunity we […]
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Two US Senators are about to introduce a new bill to Congress aimed at creating a comprehensive regulatory framework for the crypto industry. According to a recent report by Politico, Republican Senator Cynthia Lummis of Wyoming and Democrat Senator Kirsten Gillibrand of New York are prepared to unveil the highly-anticipated bipartisan bill on June 7th. […]
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Two US lawmakers have introduced a bipartisan bill that would require members of Congress to declare their crypto holdings. The Cryptocurrency Accountability Act would make it mandatory for members of Congress to report any purchase, sale or exchange of digital assets that exceeds $1,000. They would also have to report crypto transactions made by their […]
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The Republican senator for Wyoming has called on her colleagues to withhold support for Fed chair Jay Powell.
Republican senator for Wyoming Cynthia Lummis has argued that the Federal Reserve is “violating the law” by delaying the processing of applications from crypto-native banks to receive accounts at the central bank.
In a Nov. 30 op-ed for the Wall Street Journal, Lummis claimed that the Fed was treating the Special Purpose Depository Institutions (SPDIs), also known as ‘blockchain banks’, in her home state unfairly. She called on her Republican colleagues to withhold support for Fed chair Jay Powell who was reappointed by President Biden on Nov. 23.
In Feb. 2019, Wyoming state legislature approved SPDIs to serve businesses unable to secure banking services from the Federal Deposit Insurance Corporation (FDIC) due to their dealings with crypto.
In 2020, two Wyoming SPDIs Kraken and Avanti received their bank charters. Shortly after, they applied for master accounts with the Federal Reserve Bank of Kansas City. Their applications are yet to be approved.
The state has been in discussions whether SPDIs should be considered banks under federal law. In the article, Lummis claimed that SPDIs should, “without a doubt,” be considered banks under federal law and that “Wyoming checked every box.” She added that SPDIs meet the standard set by Congress in the Federal Reserve Act for what constitutes a bank.
She said that “in fact the Fed is violating the law by delaying” issuing the SPDIs approval, citing federal courts which have stated that the Fed “has a duty to give payment system access to all banks and credit unions conducting legal activities.”
Related: ‘Thank God for Bitcoin,’ Cynthia Lummis says on US debt limit raise
On Oct. 7, Lummis filed documents revealing that she had purchased an unknown amount of Bitcoin (BTC) on Aug. 16 worth somewhere between $50,001 and $100,000.
Lummis made the purchase less than two weeks after she and other senators attempted to gain support for a pro-crypto amendment into President Joe Biden’s infrastructure bill.
U.S. lawmaker and bitcoin advocate Cynthia Lummis has indicated that cryptocurrency miners are welcome in Wyoming. In a recent interview, the senator defended bitcoin’s carbon footprint and later invited miners to her home state on social media. Crypto Mining Adapted to Non-Carbon Emitting Energy With the ongoing crackdown on cryptocurrency mining in China, companies in […]