From one bankruptcy to another: is FTX's worse than Enron's? “The complete failure of corporate controls at the company is unprecedented,” said the new CEO, John J. Ray III, who has a career of more than 40 years in restructuring, including overseeing the Enron liquidation, yesterday. .
The executive cited the firm's poor internal controls and record keeping, which has led the biggest financial collapse in the crypto asset management market.
“From the integrity of compromised systems and flawed offshore regulatory oversight 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 added.
Meanwhile, the search for the company's cash and cryptocurrencies has begun to try to locate the financial resources. But it is being a difficult battle. Until now, only about 740 million dollars have been recovered, a small part. US lawyers advising the platform said in a court filing yesterday that FTX founder and former CEO Sam Bankman-Fried is undermining the efforts with "incessant and disruptive tweets."
FTX "did not maintain centralized control of its cash" or an accurate list of bank accounts and account signatories, nor did it pay sufficient attention to the creditworthiness of banking partners, according to Ray.
Yesterday it was learned that the thirty-year-old Bankman-Fried and two other top FTX executives received huge loans from its affiliated trading arm, Alameda Research, valued at about $4.1 billion, to carry out operations not always related to asset management.
Ray also noted that long-term records of decision-making are hard to find: Bankman-Fried often communicated through apps that self-deleted after a short time and asked employees to do the same.
In addition, FTX Group's corporate funds were used to purchase homes and other personal items for employees, Ray said. Some of the real estate was registered in the personal names of FTX employees and advisers. There is also a jurisdictional battle: the company wants to be subject to the courts of the Bahamas, where it is based. A tax haven.
