The restructuring official tasked with overseeing the FTX bankruptcy process said in a court filing that never in his career has he seen “such a complete failure of corporate controls”.
“From compromised systems integrity and failed regulatory oversight abroad to the concentration of control in the hands of a very small group of unsophisticated, potentially compromised, inexperienced individuals, this situation is unprecedented,” said John J. Ray III, who previously oversaw the liquidation of Enron.
Ray was named CEO of FTX when the cryptocurrency exchange filed for bankruptcy last Friday, and its founder, Sam Bankman-Fried, stepped down.
The collapse of Bankman-Fried’s empire, which included his now-bankrupt hedge fund Alameda Research, has shaken the entire digital asset ecosystem and sparked a domino effect among cryptocurrency companies, forced to halt withdrawals and may be filing. of bankruptcy.
In Thursday’s court filing, Ray exposed a series of serious problems with financial statements prepared by FTX and Alameda under Bankman-Fried.
To the best of his knowledge, he said, none of the financial statements have been audited and he has no confidence in their accuracy. In the case of at least one FTX affiliate, Island Bay Ventures, Ray was unable to locate any financial statements.
Many of the FTX Group companies “lacked proper corporate governance” and some “never had board meetings,” the document said.
FTX also lacked centralized control of its cashier. Fund mismanagement was so bad under Bankman-Fried that the new management still doesn’t know how much cash the FTX Group has.
Other procedural flaws include “the absence of an accurate list of bank accounts and account signatories, as well as insufficient attention to the credibility of banking partners.”
Additionally, Ray said corporate funds were used to purchase homes and other personal items for employees and consultants in the Bahamas, where FTX was headquartered.
“There doesn’t seem to be documentation for some of these transactions like loans,” Ray said.
Source: CNN Brasil
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