FTX was an 'utter failure of corporate controls at every level of an organization', says CEO

John Ray, who took implicit arsenic CEO of crypto speech FTX amid bankruptcy proceedings, has written elaborate grounds successful mentation for his quality earlier the United States House Financial Services Committee. 

In grounds made disposable for the ‘Investigating the Collapse of FTX, Part I’ proceeding connected Dec. 13, Ray reiterated galore of the claims made successful bankruptcy court, saying the illness of the illness was owed successful portion to “the implicit attraction of power successful the hands of a precise tiny radical of grossly inexperienced and unsophisticated individuals.” Ray, who oversaw the liquidation of vigor institution Enron during the aboriginal 2000s, added that the enactment astatine FTX had “failed to instrumentality virtually immoderate of the systems oregon controls” indispensable to support user assets.

“Never successful my vocation person I seen specified an utter nonaccomplishment of firm controls astatine each level of an organization, from the deficiency of fiscal statements to a implicit nonaccomplishment of immoderate interior controls oregon governance whatsoever,” said Ray.

The FTX CEO besides countered claims by his predecessor Sam Bankman-Fried, scheduled to look virtually astatine the aforesaid hearing. Bankman-Fried has said successful galore interviews pursuing the exchange’s bankruptcy filing that FTX US — the derivatives speech nether FTX Group — was apt solvent and susceptible of making users full nether definite circumstances.

However, according to Ray’s written statement, “FTX US was not operated independently of FTX.com” and a Chapter 11 filing was indispensable to debar a slope run:

“Since the clip of the filing, I person go adjacent much assured this was the close decision, arsenic the books and records issues astatine FTX US and the galore relationships betwixt FTX US and the different FTX Group companies go clearer.”

The FTX CEO said connected Nov. 16 that Bankman-Fried “has nary ongoing role” astatine the steadfast oregon its subsidiaries, and “does not talk connected their behalf.” SBF has continued to springiness interviews detailing his relation successful the events starring up to the exchange’s downfall arsenic portion of an ‘apology tour’.

Ray’s breakdown of the events starring up to the bankruptcy filing included lawsuit assets from FTX “commingled” with assets from Alameda Research, the hedge money utilizing said assets for borderline trading, and exposing them to “to monolithic losses”. In addition, FTX Group went connected a “spending binge” from 2021 to 2022, acquiring firms and making investments for astir $5 billion.

Related: SBF misses the Senate proceeding but promises to attest to the House: Law Decoded

The House committee proceeding volition beryllium the 2nd exploring the illness of FTX pursuing a Dec. 1 proceeding of the Senate Agriculture Committee, successful which Commodity Futures Trading Commission seat Rostin Behnam was the sole witness. The Senate Banking Committee has besides scheduled a proceeding for Dec. 14, with Hollywood prima Ben McKenzie, capitalist Kevin O'Leary, instrumentality prof Hilary Allen, and Jennifer Schulp, the manager of fiscal regularisation studies astatine the Cato Institute’s Center for Monetary and Financial Alternatives, appearing arsenic witnesses.