New FTX CEO Says ‘Unacceptable Practices’ by ‘Inexperienced and Unsophisticated Individuals’ Led to FTX Collapse – Here’s What Happened
John Ray III, the new CEO of collapsed crypto exchange FTX, has claimed that Sam Bankman-Fried's crypto empire had virtually no corporate controls and a surprising lack of financial and other record-keeping.
In prepared remarks released Monday ahead of his testimony, Ray, a bankruptcy expert who previously oversaw the aftermath of the collapsed energy giant Enron, said he has never seen such an "utter failure" of corporate controls in his entire career.
"The FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people’s money or assets," he said.
One of the biggest allegations against SBF is that Alameda Research, a quantitative trading firm founded by SBF that was supposed to act as a completely separate company, was using FTX customers' money to make risky financial bets.
Ray confirmed that “customer assets from FTX.com were commingled with assets from the Alameda trading platform.” That could end up being a grave issue for SBF and other executives of FTX and Alameda.
However, SBF has consistently denied that he was aware of customer assets being commingled. Notably, BBC recently claimed that a former senior FTX employee who worked with SBF said that he must have been aware that Alameda Research was using FTX customer funds.
"No that's not true," Bankman-Fried said, denying claims that he was aware that Alameda was using FTX user funds to make risky trades. "That's on me, one way or another," he said.
Other major issues highlighted by Ray include a lack of transaction documentation
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