appointed FTX CEO John Ray III<\/a> minced no words in a filing with the U.S. Bankruptcy Court for the District of Delaware, declaring that \u201cin his 40 years of legal and restructuring experience,\u201d he had never seen \u201csuch a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.\u201d<\/p>\n\n\n\nRay formerly served as CEO of Enron after the implosion of the energy titan. He promised to work with regulators to investigate FTX founder Sam Bankman-Fried.<\/p>\n\n\n\n
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In the filing, Ray disclosed that he did \u201cnot have confidence\u201d in the accuracy of the balance sheets for FTX and its sister company Alameda Research, writing that they were \u201cunaudited and produced while the Debtors [FTX] were controlled by Mr. Bankman-Fried.\u201d<\/p>\n\n\n\n
The document is a declaration from Ray in his new role as CEO of FTX and associated entities, which filed for bankruptcy last week in an implosion that left the crypto world reeling and investors shaken.<\/p>\n\n\n\n
Ray excoriated Bankman-Fried and his management team for what were described as lackadaisical controls on systems and regulatory compliance.<\/p>\n\n\n\n
\u201cThe concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals\u201d was unprecedented, the former Enron recovery boss said.<\/p>\n\n\n\n
Ray said a \u201csubstantial portion\u201d of assets held with FTX may be \u201cmissing or stolen,\u201d following widespread reports on social media of the theft of hundreds of millions in cryptocurrencies.<\/p>\n\n\n\n
Coordinating with regulators, Ray wrote, the Chapter 11 bankruptcy process would examine the actions of Bankman-Fried in connection with FTX\u2019s collapse.<\/p>\n\n\n\n
Alarmingly, Ray wrote that part of his remit would be to implement controls and basic corporate standards such as \u201caccounting, audit, cash management, cybersecurity, human resources, risk management, data protection and other systems that did not exist, or did not exist to an appropriate degree, prior to my appointment.\u201d<\/p>\n\n\n\n
Bankman-Fried and FTX \u201cmanagement practices included the use of an unsecured group email account as the root user to access confidential private keys and critically sensitive data for the FTX Group companies around the world, the absence of daily reconciliation of positions on the blockchain, the use of software to conceal the misuse of customer funds.\u201d<\/p>\n\n\n\n
Bankman-Fried wasn\u2019t immediately available for comment.<\/p>\n\n\n\n
Sophisticated software was similarly used to conceal mismarked and fraudulent customer positions in the 2008 collapse of Bernie Madoff\u2019s Ponzi scheme.<\/p>\n\n\n\n
FTX is presently working to account for an accurate statement of cash and crypto assets. Ray said it would not be \u201cappropriate for stakeholders or the Court to rely on the audited financial statements as a reliable indication of the financial circumstances\u201d of FTX.<\/p>\n\n\n\n
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<\/p>\n","protected":false},"excerpt":{"rendered":"AND FTX donated to the Democrat’s campaigns in the rigged midterms Never seen \u2018such a complete failure\u2019 of corporate controls, says new FTX CEO who also oversaw Enron bankruptcy KEY POINTS Newly appointed FTX CEO John Ray III scorched Sam Bankman-Fried for a total absence of trustworthy data and lack of financial safeguards. Ray, who […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2537","post","type-post","status-publish","format-standard","hentry","category-daily-news"],"_links":{"self":[{"href":"https:\/\/liferep.net\/index.php?rest_route=\/wp\/v2\/posts\/2537","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/liferep.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/liferep.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/liferep.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/liferep.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2537"}],"version-history":[{"count":1,"href":"https:\/\/liferep.net\/index.php?rest_route=\/wp\/v2\/posts\/2537\/revisions"}],"predecessor-version":[{"id":2538,"href":"https:\/\/liferep.net\/index.php?rest_route=\/wp\/v2\/posts\/2537\/revisions\/2538"}],"wp:attachment":[{"href":"https:\/\/liferep.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2537"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/liferep.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2537"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/liferep.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2537"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}