The New FTX CEO Slams The Crypto Exchange’s Management During Sam Bankman-Tenure Fried’s

In a series of documents in a Delaware court, new FTX CEO John J. Ray III slammed his predecessor, Sam Bankman-Fried, for “unprecedented” poor management practices.

Ray, who previously oversaw financial crises such as Enron, cited inadequate record-keeping and a lack of senior management experience, as well as the use of corporate cash to purchase real estate in the Bahamas.

“Never in my career have I seen such a catastrophic collapse of corporate controls and such a complete absence of trustworthy financial information as occurred here. This situation is unparalleled, from compromised system integrity and inadequate regulatory supervision outside to the concentration of control in the hands of a very small group of inexperienced, naive, and potentially corrupted persons.” Ray wrote in a court filing on Thursday. 

Ray is attempting to untangle a complicated web of dozens of organizations that appear to have had little regard for corporate norms.

According to him, FTX “did not keep appropriate books and records or security controls” for its digital assets, used insecure shared email accounts to access private keys, and still cannot give a list of those working for the company as of Nov. 11.

Ray also criticized the use of software to conceal “misuse of corporate funds,the failure to reconcile blockchain positions on a daily basis, and the lack of independent governance between Alameda and the cluster of companies that includes FTX.com, caused cracks in the company to deepen before its collapse.

FTX Group corporate funds were “used to acquire residences and other personal assets for workers and consultants” in the Bahamas, and funds were moved to personnel directly with no record of them having to repay any debt.

Liquidators from the Bahamas have argued that the company was actually run from there, and that the US side of the case should be handled as a subsidiary issue in a New York court under Chapter 15, another section of the US bankruptcy code that deals with cross-border failures.

Coincu will continue to update the situation related to Sam Bankman-Fried, you can find out more information through this article.

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