By Mark Ackman
The new chief executive of FTX, who had also been Enron’s liquidator, does not have any good things to say about FTX.
Last week, the crypto exchange and its many affiliates filed for bankruptcy, and its CEO, Sam Bankman-Fried stepped down.
He was replaced by John J. Ray III, who stated that throughout his career of 40 years, he had never come across anything like this, even though he had worked on numerous company meltdowns, including the notorious Enron scandal.
The new CEO
He stated that he had not seen such utter failure where corporate controls are concerned and there was no trustworthy financial information to be found.
The new CEO submitted a statement in Delaware to the bankruptcy court where FTX has filed for bankruptcy.
He asserted that it was an unprecedented situation because there was a small group of people in control, who did not have any experience, lacked sophistication, and were potentially compromised.
He went on to say that the regulatory oversight in other regions had been faulty and the integrity of all systems was compromised.
Ray also expressed his ire against his predecessor, Sam Bankman-Fried. He asserted that the co-founder of FTX does not work for the company anymore, or any of its related entities.
SBF
He said that Bankman-Fried was in the Bahamas and was continuously making misleading and erratic public statements.
Ray said that SBF had financial holdings and connections in the Bahamas that remained unclear, but he was constantly tweeting things that are not relevant.
He also discussed all the information he had discovered and said that the statements SBF had made as CEO were also doubtful.
This is because the balance sheets that were made under his leadership are all unaudited, so they cannot be relied upon.
He also added that SBF had claimed that as of July 2022, the FTX crypto exchange had millions of users, but his team had not been able to verify this figure.
More details
The top executive also said that since SBF left, they have informed banking institutions to not accept any instructions from him.
All those believed to have cash that belongs to FTX have also been told to pause withdrawals right away. Ray also highlighted that no information had been retained at FTX and this was another problem.
He said that one of the biggest business failures for the exchange was the absence of lasting records. SBF used apps for communications that were scheduled to auto-delete and employees were told to do the same.
Therefore, this means that there is a lot of essential information missing, particularly in relation to decision-making.
Ray also confirmed that the investigation team looking into FTX also includes the former directors of enforcement at the Commodity Futures Trading Commission (CFTC) as well as the Securities and Exchange Commission (SEC).
As it appears, SBF had likely been building a house of cards that has come crashing down and has resulted in disaster for the crypto space.