FTX's Bankruptcy.
The new CEO has shared how FTX was internally managed:
1. Private keys access
2. Use of company funds
3. How money was managed
4. SBF's message system
5. Billion-dollar personal loans
6. Internal departments
This is what he said:
The new CEO has shared how FTX was internally managed:
1. Private keys access
2. Use of company funds
3. How money was managed
4. SBF's message system
5. Billion-dollar personal loans
6. Internal departments
This is what he said:
1/ FTX's new CEO on SBF:
"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."
"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."
2/ Lack Of Systems
John Ray III says that FTX had no systems:
"Accounting, audit, cash management, cybersecurity, human resources, risk management, data protection and other systems that did not exist, or did not exist to an appropriate degree, prior to my appointment"
John Ray III says that FTX had no systems:
"Accounting, audit, cash management, cybersecurity, human resources, risk management, data protection and other systems that did not exist, or did not exist to an appropriate degree, prior to my appointment"
3/ FTT Loans To BlockFi
"FTX US has made loans and investments, including a loan of FTT tokens to BlockFi Inc. in a principal amount of FTT tokens valued at $250 million as of September 30, 2022."
"FTX US has made loans and investments, including a loan of FTT tokens to BlockFi Inc. in a principal amount of FTT tokens valued at $250 million as of September 30, 2022."
4/ Unaudited Financials
"Alameda Research LLC prepared consolidated financial statements on a quarterly basis."
To John Ray III's knowledge, none of these financial statements have been audited.
"Alameda Research LLC prepared consolidated financial statements on a quarterly basis."
To John Ray III's knowledge, none of these financial statements have been audited.
5/ Loans To Themselves
"(...) and three loans by Alameda Research Ltd.: one to Mr. Bankman-Fried, of $1 billion; one to Mr. Singh, of $543 million; and one to Ryan Salame, of $55 million."
"(...) and three loans by Alameda Research Ltd.: one to Mr. Bankman-Fried, of $1 billion; one to Mr. Singh, of $543 million; and one to Ryan Salame, of $55 million."
6/ No Board Meetings
"Many of the companies in the FTX Group, especially those organized in Antigua and the Bahamas, did not have appropriate corporate governance. I understand that many entities, for example, never had board meetings"
"Many of the companies in the FTX Group, especially those organized in Antigua and the Bahamas, did not have appropriate corporate governance. I understand that many entities, for example, never had board meetings"
7/ $659,000 Worth Of Crypto
FTXβs Crypto Assets held at par value is only $659,000. This is in contrast to SBF claims, who said their liquid portfolio was $900M.
FTXβs Crypto Assets held at par value is only $659,000. This is in contrast to SBF claims, who said their liquid portfolio was $900M.
8/ Where Did The Money Go?
"Because of historical cash management failures, the Debtors do not yet know the exact amount of cash that the FTX Group held as of the Petition Date"
"Because of historical cash management failures, the Debtors do not yet know the exact amount of cash that the FTX Group held as of the Petition Date"
9/ Frozen Withdrawals
"These banking institutions have been instructed to freeze withdrawals and alerted not to accept instructions from Mr. Bankman-Fried or other signatories."
"These banking institutions have been instructed to freeze withdrawals and alerted not to accept instructions from Mr. Bankman-Fried or other signatories."
10/ No Accounting Department
"The Debtors do not have an accounting department and outsource this function."
"The Debtors do not have an accounting department and outsource this function."
11/ Who Was Working At FTX?
"At this time, the Debtors have been unable to prepare a complete list of who worked for the FTX Group as of the Petition Date, or the terms of their employment."
"At this time, the Debtors have been unable to prepare a complete list of who worked for the FTX Group as of the Petition Date, or the terms of their employment."
12/ How FTX Employees Were Paid
"(..)employees of the FTX Group submitted payment requests through an on-line βchatβ platform where a disparate group of supervisors approved disbursements by responding with personalized emojis."
"(..)employees of the FTX Group submitted payment requests through an on-line βchatβ platform where a disparate group of supervisors approved disbursements by responding with personalized emojis."
13/ Use Of Funds to Buy Homes
"I understand that corporate funds of the FTX Group were used to purchase homes and other personal items for employees and advisors"
"I understand that corporate funds of the FTX Group were used to purchase homes and other personal items for employees and advisors"
14/ No Security Controls Or Record Keeping
"The FTX Group did not keep appropriate books and records, or security controls, with respect to its digital assets. Mr. Bankman-Fried and Mr. Wang controlled access to digital assets of the main businesses in the FTX Group"
"The FTX Group did not keep appropriate books and records, or security controls, with respect to its digital assets. Mr. Bankman-Fried and Mr. Wang controlled access to digital assets of the main businesses in the FTX Group"
15/ Private Keys Access
"Unacceptable management practices included the use of an 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"
"Unacceptable management practices included the use of an 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"
16/ The House Always Wins (?)
"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.. comβs auto-liquidation protocol"
"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.. comβs auto-liquidation protocol"
17/ Vanishing Messages
"Mr. 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."
"Mr. 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."
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