John J. Ray III may have unwounded major corporate failures, but in over four decades of legal and restructuring experience, he claims to have never seen such “unprecedented” management failures as in the case of the bankrupt FTX cryptocurrency exchange under Sam Bankman-Fried’s tenure.
In the latest filing to federal bankruptcy court, FTX’s new chief restructuring officer said,
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated, and potentially compromised individuals, this situation is unprecedented.”
More Shocking Allegations Incoming
Ray also stated that the FTX Group did not keep appropriate books and records, or security controls, with respect to its digital assets. Bankman-Fried, along with co-founder Gary Wang, controlled access to the digital assets of the main businesses in the FTX Group.
The exec deemed the management practices as “unacceptable” while disclosing that the operators used an unsecured group email account as the root user to access confidential private keys and critically sensitive data for the affiliated companies across the globe.
He also said there was no “daily reconciliation of positions on the blockchain” and went on to claim that the operators used software to conceal the misuse of customer funds. Alameda, the sister trading firm at the center of the chaos, was allegedly “secretly exempted” from certain aspects of FTX.com’s auto-liquidation protocol, Ray claimed.
John Ray’s Response to SBF’s Tweets
Ray took over as the CEO last week with FTX’s bankruptcy filings. He is known for overseeing the bankruptcy of former fraudulent energy behemoth – Enron – which had over $63 billion in assets and was the largest corporate bankruptcy in US history during the early 2000s.
Meanwhile, Bankman-Fried’s erratic tweets, which eventually spelled out “what happened” across nine tweets, have also garnered much attention.
Addressing the same, Ray stated in his filing that SBF “continues to make erratic and misleading public
statements,” and added that his connections and financial holdings in the Bahamas remain unclear to the new CEO.