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Restructuring expert for FTX says ‘never seen such failure’

Restructuring expert for FTX says ‘never seen such failure’

Posted November. 19, 2022 07:25,   

Updated November. 19, 2022 07:25


FTX, the No. 3 cryptocurrency exchange in the U.S., left huge ramifications on the global financial market by abruptly filing for chapter 11 bankruptcy protection. "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," new FTX CEO John Ray III said in court documents filed on Thursday. He is the restructuring expert who served as a liquidator for Enron, which went bankrupt due to accounting irregularities in 2001. He was named to the post at FTX last Friday when the company filed for bankruptcy protection.

According to media outlets, including the Wall Street Journal, on Thursday, the new CEO said, “One of the most pervasive failures of the FTX.com business in particular is the absence of lasting records of decision-making.” He made the statement through bankruptcy protection dossiers FTX submitted to the court to file for bankruptcy protection, expressing his strong distrust in Sam Bankman-Fried, founder and former CEO of the troubled company. “FTX failed in part because the company was in the hands of a very small group of inexperienced, unsophisticated, and potentially compromised individuals," he said in the court filings.

Ray said he had found circumstantial evidence that FTX’s key executives, including Bankman-Fried, misused corporate funds. “They used corporate money to purchase employees’ residences or personal items without taking proper internal process,” he said. Notably, because former CEO Bankman-Fried used a messenger platform that automatically deletes chats, most records on key decisions in the company have been deleted, Ray said.