Attorneys of the bankrupt crypto exchange FTX argued that to figure out how exactly FTX became insolvent, the Delaware bankruptcy court needs to delay the bankruptcy proceedings for "a month or two months." 

Lawrence Gebhardt of Gebhardt and Smith, representing FTX in the ongoing bankruptcy, asked the court to delay the process because the discovery of the circumstances of the case will be “expensive and requiring a lot of travel,” as important parties of the case are located in different parts of the world.

For example, FTX former attorney Dan Friedberg, who is one of the defendants in the case, is based in Washington, another former counsel Can Sun is in the Bahamas and Sam Bankman-Fried, the former CEO recently convicted of fraud, is in prison, Gebhardt said.

“They all need to be deposed,” he said, explaining that back in November 2022, just days before the bankruptcy, FTX’s own attorneys from Sullivan and Cromwell said FTX was solvent. “We need to find out what happened in that year between November of 2021 and October of 2022 that caused FTX to become insolvent,” Genhardt said.

In response, Jonathan Carter, partner at the law firm Sullivan and Cromwell managing the bankruptcy, said that the defense had all the time it needed to join the discovery of facts and was notified about all the documents available for processing on September 21. 

Denying the motion

Asked by the Judge John Dorsey whether Gebhardt and Smith received the letter on Sept. 21, Gebhadrt said “I don’t think I got it,” weirdly echoing the testimony Sam Bankman-Fried gave in the New York criminal court two weeks ago, in which he could not recall most of what the prosecutor asked him. 

The judge denied the motion. “If the discovery is as complex as it is said to be, it needs to be started now, not delayed,” Dorsey said.

On November 2, former FTX CEO Sam Bankman-Fried was convicted of defrauding the customers, lenders, and investors of FTX as the exchange funneled its users and investors money to its affiliated trading firm Alameda Research.