New CEO Says FTX Is the Worst Case of Corporate Failure With Untrustworthy Financial Data and Unacceptable Practices

The caller CEO of FTX, appointed aft the crypto speech filed for bankruptcy, has blasted the institution nether erstwhile CEO Sam Bankman-Fried. “Never successful my vocation person I seen specified a implicit nonaccomplishment of firm controls and specified a implicit lack of trustworthy fiscal accusation arsenic occurred here,” helium said successful a tribunal filing.

‘Complete Failure of Corporate Controls’

John Ray III, the caller CEO of FTX and a seasoned insolvency nonrecreational who oversaw the liquidation of Enron, revealed successful a tribunal filing connected Thursday that FTX is the worst lawsuit of firm nonaccomplishment that helium had seen successful his much than 40-year career.

Ray, who was appointed to regenerate Sam Bankman-Fried (SBF) erstwhile FTX filed for Chapter 11 bankruptcy connected Nov. 11, wrote:

Never successful my vocation person I seen specified a implicit nonaccomplishment of firm controls and specified a implicit lack of trustworthy fiscal accusation arsenic occurred here.

“From compromised systems integrity and faulty regulatory oversight overseas to the attraction of power successful the hands of a precise tiny radical of inexperienced, unsophisticated and perchance compromised individuals, this concern is unprecedented,” helium described.

‘Unacceptable Management Practices’

“Many of the companies successful the FTX Group, particularly those organized successful Antigua and the Bahamas, did not person due firm governance,” Ray explained, noting that galore entities ne'er had committee meetings.

In addition, “The FTX Group did not support due books and records, oregon information controls, with respect to its integer assets,” the caller CEO detailed, elaborating:

Unacceptable absorption practices included … the lack of regular reconciliation of positions connected the blockchain, the usage of bundle to conceal the misuse of lawsuit funds, the concealed exemption of Alameda from definite aspects of FTX.com’s auto-liquidation protocol, and the lack of autarkic governance.

He added that the crypto steadfast nether Bankman-Fried utilized “an unsecured radical email relationship arsenic the basal idiosyncratic to entree confidential backstage keys and critically delicate information for the FTX Group companies astir the world.”

Bankman-Fried ‘Continues to Make Erratic and Misleading Public Statements’

“One of the astir pervasive failures of the FTX.com concern successful peculiar is the lack of lasting records of decision-making,” Ray said, adding:

Bankman-Fried often communicated by utilizing applications that were acceptable to auto-delete aft a abbreviated play of time, and encouraged employees to bash the same.

Furthermore, helium stressed that “Bankman-Fried, presently successful the Bahamas, continues to marque erratic and misleading nationalist statements.”

FTX’s 4 Business Silos

Ray divided FTX’s businesses into 4 groups, which helium calls “silos,” the tribunal filing shows.

FTX’s 4 silos. Source: bankruptcy tribunal papers filed by John Ray.

One is the WRS Silo, which includes crypto speech FTX US that is registered with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) arsenic a wealth services concern and holds a bid of authorities wealth transmission licenses successful the U.S.

The adjacent silo is the Alameda Silo, which includes Alameda Research LLC, organized successful the State of Delaware. The others are the Ventures Silo, which includes FTX Ventures Ltd., and the Dotcom Silo, which includes crypto trading level FTX.com. FTX Trading Ltd., the genitor institution of FTX.com, is organized successful Antigua.

According to Ray, astir of the fiscal statements for FTX’s 4 silos, including equilibrium sheets, bash not look to person been audited. Emphasizing that each fiscal connection was created portion the institution was controlled by Bankman-Fried, the enforcement said:

I bash not person assurance successful it, and the accusation therein whitethorn not beryllium close arsenic of the day stated.

What bash you deliberation astir the findings by the caller FTX CEO? Let america cognize successful the comments conception below.

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