FTX bankruptcy trustee: “I’ve never seen anything like it.” And he had managed Enron….
We give you a rough idea of the chaos and scandal resulting from the bankruptcy of the FTX exchange: the new CEO and liquidator of FTX, John Ray III, also oversaw the dissolution and liquidation of Enron, so he is quite an expert of corporate black holes. Despite this he admitted that " in my career I have never seen such a complete failure of corporate controls and such a complete absence of reliable financial information as in this case ". Welcome to the miracle of centralized exchanges and “Woke”.
In case the extent of FTX's fraud wasn't clear enough, he added that “ from compromised system integrity and poor regulatory oversight overseas, to the concentration of control in the hands of a very small group of inexperienced , untrained individuals and potentially compromised , we find ourselves in a situation that is unprecedented ."
According to Ray, he's singled out "only a portion" of FTX Group's digital assets that it hopes to recover during the chapter 11 bankruptcy. So far they've gotten about a million dollars, which is the crumbs. Then he secured about $740 million worth of cryptocurrency in offline cold storage, a storage method designed to prevent hackers. That's just a portion of the $10-50 billion in liabilities the company disclosed in its bankruptcy filing. The hole is huge.
But there's more: Ray said the company's audited financial statements cannot be trusted, adding that liquidators are working to rebuild the financial statements of FTX-related entities backwards, from the bottom up.
According to Ray, FTX "did not maintain centralized control of its liquidity" and did not keep an accurate list of bank accounts and account signatories, nor did it pay enough attention to the creditworthiness of banking partners. Advisors don't yet know how much cash FTX Group had when it filed for bankruptcy, but so far they've found about $560 million attributable to various FTX entities.
Although restructuring consultants have been in control of FTX for less than a week, they have seen enough to paint the crypto firm as a deeply flawed enterprise. It's hard to find lasting records of decision-making: Bankman-Fried often communicated through applications that quickly self-deleted and asked employees to do the same, according to Ray.
FTX Group's corporate funds have been used to purchase homes and other personal items for employees, Ray said.
Company funds have also been used to purchase homes and other personal items for employees and consultants, sometimes in their own names.
“In the Bahamas, I understand that FTX Group corporate funds have been used to purchase homes and other personal items for employees and consultants. I understand that some of these transactions have no loan documents and some real estate has been registered in the personal names of these employees and consultants in Bahamian registries,” said Ray, who also noted that the company did not have a adequate corporate governance and has never held board meetings. There was no accurate listing of bank accounts and account signatories, and not enough attention was paid to the creditworthiness of banking partners.
The archive sheds light on rough business practices, such as FTX employees asking to be paid through an online "chat" platform "where a diverse group of supervisors approved disbursements by responding with personalized emojis."
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The article The bankruptcy trustee of FTX: “I've never seen anything like it”. And he had managed Enron…. comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/il-curatore-fallimentare-di-ftx-non-hi-mai-visto-nulla-di-simile-e-aveva-gestito-enron/ on Thu, 17 Nov 2022 19:40:35 +0000.