The brand new CEO of collapsed crypto change FTX, John Ray III, has filed an preliminary assertion with the U.S. Chapter Court docket for the District of Delaware, making a scathing judgment of Sam Bankman-Fried and his firms.
Ray was appointed CEO of FTX lower than every week in the past when founder Bankman-Fried filed for chapter safety for FTX, Alameda and greater than 130 associated firms and stepped down as CEO.
The brand new CEO has taken the lead function in a number of of the biggest company collapses in historical past, exposing felony exercise and malfeasance resembling within the Enron case. So the person has expertise with scandal and mismanagement. But, in his first court docket submitting, he states:
By no means in my profession have I seen such a whole failure of company controls and such a whole absence of reliable monetary info as occurred right here.
“From compromised techniques integrity and defective regulatory oversight overseas, to the focus of management within the arms of a really small group of inexperienced, unsophisticated and probably compromised people, this case is unprecedented,” Ray mentioned.
The brand new CEO additionally made it recognized that the Antigua and Bahamas-based FTX Group firms, specifically, didn’t have enough company governance and lots of had by no means held a board assembly. FTX, FTX US and Alameda had nearly “no accounting division”.
As well as, the chapter trustee chalks up the shortage of an correct checklist of financial institution accounts and approved signatories, in addition to inadequate creditworthiness of financial institution companions.
New FTX CEO Reveals Deep Swamp Of Bankman-Fried
What else is Ray revealing? The chapter trustee additionally acknowledged, amongst different issues, that the “honest worth” of all cryptocurrencies held by FTX internationally is barely $659!
Additional, Ray estimates the whole of all consolidated belongings to be round $2.56 billion. Solely lately, SBF estimated the worth at $5.5 billion on Twitter.
Furthermore, Ray additionally discloses the usage of firm funds to pay for homes and different gadgets for workers. Actually customers paid for SBF’s luxurious mansion:
I perceive that FTX Group company funds have been used within the Bahamas to buy houses and different private property for workers and consultants. I perceive that there look like no mortgage information for a few of these transactions and that sure properties have been recorded within the Bahamian information within the private names of those workers and consultants.
As well as, it’s alleged that there could “be very substantial transfers of Debtor property within the days, weeks and months previous to the Petition Date”.
If this weren’t scandalous sufficient, Ray reveals that Bankman-Fried’s hedge fund has loaned $2.3 billion to… Sam Bankman-Fried himself, to his Paper Chicken firm.
Need one other scandal? The chapter paperwork additionally disclose that FTX coded its liquidation protocol in such a means that Alameda was excluded from liquidation. Insane!
Need one other piece of scandal? The paperwork additionally reveal that FTX programmed its liquidation protocol in such a means as to exclude Alameda from liquidation. Wow!
However that’s removed from all. Thus, beneath Bankman-Fried, FTX didn’t embrace buyer liabilities in FTX’s monetary statements. “I don’t consider it applicable for stakeholders or the Court docket to depend on the audited monetary statements as a dependable indication,” Ray asserted.
Ray additionally can’t reply the query of who was on Bankman-Fried’s firm payroll. “The Debtors have been unable to arrange a whole checklist of who labored for the FTX Group as of the Petition Date.”
Island Bay Ventures, the corporate that holds FTX’s stake in Scaramucci’s SkyBridge, is one other main problem. Ray can’t discover the corporate’s financials.
The doc additionally signifies that FTX loaned FTT token value $250 million to BlockFi. Why? Presumably to prop up BockFi….
However there may be additionally excellent news. The doc reveals that SBF’s function within the chapter is to be investigated.
