The new CEO of FTX, appointed when the crypto exchange filed for bankruptcy, has blasted the corporate under former CEO sam Bankman-Fried. “Never in my career have I seen such an entire failure of company controls and such an entire absence of trustworthy monetary info as occurred here,” he said in a very court filing.
‘Complete Failure of Corporate Controls’
John Ray III, the new CEO of FTX and a veteran insolvency professional who oversaw the liquidation of Enron, revealed in a very court filing on weekday that FTX is that the worst case of company failure that he had seen in his quite 40-year career.
Ray, who was appointed to replace sam Bankman-Fried (SBF) once FTX filed for Chapter 11 bankruptcy on November. 11, wrote:
Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.
“From compromised systems integrity and faulty restrictive oversight abroad to the concentration of management within the hands of a really tiny cluster of inexperienced, unsophisticated and probably compromised people, this example is unprecedented,” he delineated .
“Many of the companies in the FTX group, particularly those organized in island and also the bahamas, failed to have appropriate company governance,” Ray explained, noting that a lot of entities never had board meetings.
In addition, “The FTX cluster failed to keep acceptable books and records, or security controls, with regard to its digital assets,” the new CEO detailed, elaborating:
Unacceptable management practices included … the absence of daily reconciliation of positions on the blockchain, the use of software to conceal the misuse of customer funds, the secret exemption of Alameda from certain aspects of FTX.com’s auto-liquidation protocol, and the absence of independent governance.
He more that the crypto firm beneath Bankman-Fried used “an unsecured group email account as the root user to access confidential non-public keys and critically sensitive data for the FTX cluster companies round the world."
“One of the most pervasive failures of the FTX.com business in particular is that the absence of lasting records of decision-making,” Ray said, adding:
Bankman-Fried often communicated by using applications that were set to auto-delete after a short period of time, and encouraged employees to do the same.
Furthermore, he stressed that “Bankman-Fried, presently within the Bahamas, continues to form erratic and deceptive public statements.”
One is that the WRS Silo, which incorporates crypto exchange FTX United States that's registered with the Department of the Treasury’s money Crimes enforcement Network (FinCEN) as a cash services business and holds a series of state cash transmission licenses in the U.S.
The next silo is that the Alameda Silo, which incorporates Alameda analysis LLC, organized within the State of Delaware. The others are the Ventures Silo, which incorporates FTX Ventures Ltd., and the Dotcom Silo, which includes crypto commerce platform FTX.com. FTX commerce Ltd., the parent company of FTX.com, is organized in Antigua.
According to Ray, most of the financial statements for FTX’s four silos, as well as balance sheets, do not appear to own been audited. emphasizing that every financial plan was created whereas the company was controlled by Bankman-Fried, the executive said:
I do not have confidence in it, and the information therein may not be correct as of the date stated.
( Kevin Helms, Bitcoin.com, 2022)