The Justice Department is seeking an independent investigation into the FTX meltdown

The US Department of Justice is calling for an independent investigation into the collapse of cryptocurrency exchange FTX and has asked a bankruptcy judge for the green light.

FTX Trading, once the second largest crypto exchange in the world, filed for bankruptcy last month amid an $8 billion shortfall. In court documents filed Thursday, DOJ officials asked the bankruptcy judge to authorize the appointment of an independent review, citing the need for a “truly impartial” investigation into the collapse.

The crypto exchange’s new CEO, John Ray III, is conducting an internal investigation into the FTX meltdown, but the DOJ has argued that a separate, independent investigation is still needed. The Office of the US Trustee of the US Department of Justice said in the papers that while Ray’s “qualifications, competence or good faith” are not in question, his role is that of trustee for the firm’s debtors and the internal review therefore may not represent all stakeholders.

“But the issues at stake are simply too vast and important to leave to an internal investigation,” US Trustee Andrew Vara wrote in the court document.

He added: “An investigator could – and should – investigate the material and serious allegations of fraud, dishonesty, incompetence, misconduct and mismanagement.”

FTX did not immediately respond to a request for comment.

Ray, a bankruptcy expert who oversaw Enron’s liquidation, said last month he had never seen problems as severe as FTX’s.

“Never in my career have I seen such a complete failure of corporate controls and a complete lack of trustworthy financial information as here,” Ray said in November court filings.

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Christopher J Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories ranging from economic inequality and housing issues to bankruptcy and sports deals.