The FTX disaster is "unprecedented"
The man who had to clean up the mess at Enron says the situation at FTX is even worse, describing what he calls a "total failure" of corporate control.
The filing by John Ray III, the new CEO of the bankrupt cryptocurrency firm, presents a damning overview of FTX's operations under its founder Sam Bankman-Fried, from the lack of security controls to the trading funds being used. to buy houses and luxuries for employees.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial information as happened here,” Ray said. “From compromised systems integrity and flawed regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised people, this situation is unprecedented.”
Ray was named CEO on November 11, after the company nearly collapsed and his previous management sought legal advice on what to do next. Bankman-Fried was persuaded to relinquish control of the company by his lawyers and by his father, Joseph Bankman, a professor at Stanford Law School, according to Thursday's filing.
Since his resignation, Bankman-Fried has sought out media outlets for interviews and has been active on Twitter trying to explain himself and the company's failure.
In an interview with online news outlet Vox, Bankman-Fried admitted that his previous calls for crypto regulation were mainly for public relations.
“Regulators make everything worse,” Bankman-Fried said, using an expletive for emphasis.
In a brief statement, Ray said that Bankman-Fried's statements have been "erratic and misleading" and that "Bankman-Fried is not an employee of the Debtors and does not speak for them."
Ray noted that many of the FTX Group companies, particularly those in Antigua and the Bahamas, did not have proper corporate governance and many had never held a board meeting. Ray also addressed the use of corporate funds to pay for houses and other items for employees.
“In the Bahamas, I understand that FTX Group corporate funds were used to purchase homes and other personal items for employees and consultants. It is my understanding that there does not appear to be documentation for certain of these transactions as loans, and that certain real estate was registered in the personal names of these employees and advisers in the Bahamian registries,” he said.
So far, debtors have found and secured "only a fraction" of the group's digital assets they hope to recover, with around $740 million worth of cryptocurrency secured in new cold wallets, which is a way of keeping cryptocurrency tokens offline. Ray said.
Ray was named CEO of FTX less than a week ago when the company filed for bankruptcy and CEO and founder Bankman-Fried resigned. The embattled cryptocurrency exchange, billions of dollars short, sought bankruptcy protection after the exchange experienced the crypto equivalent of a bank run.
In its bankruptcy filing, FTX listed more than 130 affiliated companies around the world. The company valued its assets between $10 billion and $50 billion, with a similar estimate for its liabilities.
Bankman-Fried was recently estimated to be worth $23 billion. His net worth has all but evaporated, according to Forbes and Bloomberg, who closely track the net worth of the world's richest people.
FTX's failure goes beyond finances. The company also had major sports sponsorships, including Formula One racing and a sponsorship deal with Major League Baseball. Miami-Dade County decided Friday to end its relationship with FTX, meaning the venue where the Miami Heat will play will no longer be known as FTX Arena. Mercedes planned to remove FTX from its race cars starting last weekend.
The entry The FTX disaster is "unprecedented" was first published in Washington Hispanic.
- Allow me to introduce myself. I am Nathan Rivera, a dedicated journalist who has had the privilege of writing for the online newspaper Today90. My journey in the world of journalism has been a testament to the power of dedication, integrity, and passion.
My story began with a relentless thirst for knowledge and an innate curiosity about the events shaping our world. I graduated with honors in Investigative Journalism from a renowned university, laying the foundation for what would become a fulfilling career in the field.
What sets me apart is my unwavering commitment to uncovering the truth. I refuse to settle for superficial answers or preconceived narratives. Instead, I constantly challenge the status quo, delving deep into complex issues to reveal the reality beneath the surface. My dedication to investigative journalism has uncovered numerous scandals and shed light on issues others might prefer to ignore.
I am also a staunch advocate for press freedom. I have tirelessly fought to protect the rights of journalists and have faced significant challenges in my quest to inform the public truthfully and without constraints. My courage in defending these principles serves as an example to all who believe in the power of journalism to change the world.
Throughout my career, I have been honored with numerous awards and recognitions for my outstanding work in journalism. My investigations have changed policies, exposed corruption, and given a voice to those who had none. My commitment to truth and justice makes me a beacon of hope in a world where misinformation often prevails.
At Today90, I continue to be a driving force behind journalistic excellence. My tireless dedication to fair and accurate reporting is an invaluable asset to the editorial team. My biography is a living testament to the importance of journalism in our society and a reminder that a dedicated journalist can make a difference in the world.
- Celebrities10/12/2023Animal Rights Day, find out what it is
- Latin America10/12/2023What time does Tigres vs Pumas play? Liga MX semi-final match TODAY
- World News10/12/2023Junior vs. Medellín LIVE: the second half is already being played in the Arenosa
- Sports10/12/2023Girona beats Barcelona as a visitor and is the leader in Spain | Video