Startups

New CEO of FTX blasts its handling of financial information


The new CEO of the collapse cryptocurrency trading firm FTX, who oversaw Enron’s bankruptcy, said he has never seen such a “complete failure” of corporate control.

John Ray III, in a filing with the US bankruptcy court for the district of Delaware, said there was a “complete absence of trustworthy financial information.”

“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 said. “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.”

Ray was named CEO of FTX less than a week ago when the company filed for bankruptcy protection and its CEO and founder Sam Bankman-Fried resigned.

The advisers of the company, which are now overseeing the carcass of Sam Bankman-Fried’s FTX Group are struggling to locate the company’s cash and crypto, citing poor internal controls and record keeping.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information,” John J. Ray III, the group’s new chief executive officer who formerly oversaw the liquidation of Enron Corp., said in a sworn declaration submitted in bankruptcy court.

“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,” he added.

FTX “did not maintain centralized control of its cash” and failed to keep an accurate list of bank accounts and account signatories, or pay sufficient attention to the creditworthiness of banking partners, according to Ray. Advisers don’t yet know how much cash FTX Group had when it filed for bankruptcy, but has found about $560 million attributable to various FTX entities so far.

With inputs from agencies

 

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