{"id":14583,"date":"2022-11-18T02:33:18","date_gmt":"2022-11-18T02:33:18","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/new-ceo-says-ftx-is-the-worst-case-of-corporate-failure-with-untrustworthy-financial-data-and-unacceptable-practices-featured-bitcoin-news\/"},"modified":"2022-11-18T02:33:18","modified_gmt":"2022-11-18T02:33:18","slug":"new-ceo-says-ftx-is-the-worst-case-of-corporate-failure-with-untrustworthy-financial-data-and-unacceptable-practices-featured-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/new-ceo-says-ftx-is-the-worst-case-of-corporate-failure-with-untrustworthy-financial-data-and-unacceptable-practices-featured-bitcoin-news\/","title":{"rendered":"New CEO Says FTX Is the Worst Case of Corporate Failure With Untrustworthy Financial Data and Unacceptable Practices \u2013 Featured Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
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The new CEO of FTX, appointed after the crypto exchange filed for bankruptcy, has blasted the company under former CEO Sam Bankman-Fried. \u201cNever 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,\u201d he said in a court filing.<\/strong><\/p>\n

\u2018Complete Failure of Corporate Controls\u2019<\/h2>\n

John Ray III, the new CEO of FTX and a veteran insolvency professional who oversaw the liquidation of Enron<\/a>, revealed in a court filing on Thursday that FTX is the worst case of corporate failure that he had seen in his more than 40-year career.<\/p>\n

Ray, who was appointed to replace Sam Bankman-Fried (SBF) when FTX filed for Chapter 11 bankruptcy<\/a> on Nov. 11, wrote:<\/p>\n

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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.<\/p>\n<\/blockquote>\n

\u201cFrom compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,\u201d he described.<\/p>\n

\u2018Unacceptable Management Practices\u2019<\/h2>\n

\u201cMany of the companies in the FTX Group, especially those organized in Antigua and the Bahamas, did not have appropriate corporate governance,\u201d Ray explained, noting that many entities never had board meetings.<\/p>\n

In addition, \u201cThe FTX Group did not keep appropriate books and records, or security controls, with respect to its digital assets,\u201d the new CEO detailed, elaborating:<\/p>\n

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Unacceptable management practices included \u2026 the absence of daily reconciliation of positions on the blockchain, the use of software to conceal the misuse of customer funds, the secret exemption of Alameda from certain aspects of FTX.com\u2019s auto-liquidation protocol, and the absence of independent governance.<\/p>\n<\/blockquote>\n

He added that the crypto firm under Bankman-Fried used \u201can unsecured group email account as the root user to access confidential private keys and critically sensitive data for the FTX Group companies around the world.\u201d<\/p>\n

Bankman-Fried \u2018Continues to Make Erratic and Misleading Public Statements\u2019<\/h2>\n

\u201cOne of the most pervasive failures of the FTX.com business in particular is the absence of lasting records of decision-making,\u201d Ray said, adding:<\/p>\n

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Bankman-Fried often communicated by using applications that were set to auto-delete after a short period of time, and encouraged employees to do the same.<\/p>\n<\/blockquote>\n

Furthermore, he stressed that \u201cBankman-Fried, currently in the Bahamas, continues to make erratic and misleading public statements.\u201d<\/p>\n

FTX\u2019s 4 Business Silos<\/h2>\n

Ray divided FTX\u2019s businesses into four groups, which he calls \u201csilos,\u201d the court filing shows.<\/p>\n

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FTX\u2019s four silos. Source: bankruptcy court document filed by John Ray.<\/figcaption><\/figure>\n

One is the WRS Silo, which includes crypto exchange FTX US that is registered with the Department of the Treasury\u2019s Financial Crimes Enforcement Network (FinCEN) as a money services business and holds a series of state money transmission licenses in the U.S.<\/p>\n

The next silo is the Alameda Silo, which includes Alameda Research LLC, organized in the State of Delaware. The others are the Ventures Silo, which includes FTX Ventures Ltd., and the Dotcom Silo, which includes crypto trading platform FTX.com. FTX Trading Ltd., the parent company of FTX.com, is organized in Antigua.<\/p>\n

According to Ray, most of the financial statements for FTX\u2019s four silos, including balance sheets, do not appear to have been audited. Emphasizing that each financial statement was created while the company was controlled by Bankman-Fried, the executive said:<\/p>\n

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I do not have confidence in it, and the information therein may not be correct as of the date stated.<\/p>\n<\/blockquote>\n

What do you think about the findings by the new FTX CEO? Let us know in the comments section below.<\/strong><\/em><\/p>\n

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\nKevin Helms <\/h6>\n

\nA student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

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Disclaimer<\/strong>: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com<\/a> does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.<\/p>\n<\/div>\n

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