Corporate funds bought employee homes, no accounting department, uncertainty about who’s an employee, and other baffling behavior
John Ray III, CEO of FTX Trading Ltd, who succeeded disgraced founder Sam Bankman-Fried following the collapse of the once notionally valued $32 billion cryptocurrency exchange, told a Delaware bankruptcy court on Thursday that the company is a disaster unlike anything he has ever seen.
And Ray oversaw the 2001 dissolution of Enron, the largest corporate bankruptcy in US history at the time.
Enron has since been eclipsed in dollar terms by the fall of Lehman Brothers, with assets of $691 billion when the financial giant declared bankruptcy in 2008, but Ray still considers FTX – which sought bankruptcy protection last week – exceptional.
„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,“ Ray wrote in a court filing [PDF].
„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.“
On a practical level, Ray isn’t sure about the firm’s assets or liabilities. With regard to FTX.com, one of four business silos identified in the filing, the court filing notes,
„Mr. Bankman-Fried claimed that, by the end of 2021, around $15 billion of assets were on the platform, which according to him handled approximately 10 percent of global volume for crypto trading at the time.“ (The $32 billion valuation dates to January 31, 2022 and may reflect a broader set of assets.)
As for the FTX.
