The new CEO of FTX is shocked, chaos reigned in the company

The new CEO of FTX has never seen such a mess. Responsible for managing the group’s bankruptcy, he charts a troubling state of operation of the cryptocurrency exchange platform and founder Sam Bankman-Fried’s practices.

after bankruptcy of FTXa new CEO has been appointed to lead the company: John Ray III. An expert restructuring lawyer, he is responsible for conducting the bankruptcy proceedings of the FTX empire under the leadership of the US courts. He is best known for managing the liquidation of Enron, an energy giant that collapsed after financial fraud in 2001.

In a legal filing to a Delaware court, John Ray III expressed surprise at the operation of FTX and the practices of controversial founder Sam Bankman-Fried (SBF):

Never in my career have I seen such a complete failure of a company’s control mechanisms and such a blatant lack of reliable financial information as has occurred. “.

Behind the scenes of a historic fiasco

Stunned, the lawyer, who has 40 years of experience, quickly realized that the company was in chaos. While FTX extracted billions of dollars, Sam Bankman-Fried and his associates neglected to set up an accounting service. De facto, FTX is unable to provide the list of its top 50 creditors, but requested by the courts. Note that FTX has more than one million creditors in the world. Even more terrifying, the company does not have a directory that centralizes all of its bank accounts. We see the same mess on the HR side. FTX did not have a detailed list of all its employees.

“From the compromised integrity of systems and flawed overseas regulatory oversight, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.” adds the man responsible for the FTX bankruptcy.

John Ray III is also surprised that Sam Bankman-Fried and Gary Wang, the two founders, only had access to the digital assets of the main companies of the FTX Group”. The lawyer also revealed that employees, including senior managers, were using an insecure messaging app for him share sensitive information, including private keys meant to secure mountains of cryptocurrency. In these conversations, the employees presented requests for the payment of their salaries. They got answers from the leaders… in emoji form, the lawyer says.

Read also: Historical cryptocurrency crash – all the information live

Employees were unaware of Sam Bankman-Fried’s abuse

Finally, the CEO reveals that FTX International had only A cryptocurrency worth $659,000 at the end of September. At the time, Sam Bankman-Fried, however, assured that the exchange held $5.5 billion in crypto-assets. It appears, in view of the investigation conducted by John Ray III, that most employees were unaware that SBF was diverting client funds, to invest in real estate or to support Alameda Research, its trading company:

“Many FTX Group employees, including some senior managers, were unaware of the deficiencies.”

Therefore, Sam Bankman-Fried and his circle of close associates would be the main culprits of the disaster. In this context, the specialized lawyer wanted to distance the company from its founder, who multiplies erratic and misleading public statements”. The former billionaire was particularly noted for his astonishing confessions.

Source:

Court document

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