# #FTXs #boss #BankmanFried
— Advisors who oversee the ruins of Sam Bankman-Fried’s FTX Group on Thursday brought forward a stunning list of allegations against the company’s former leadership, criticizing the nonexistent surveillance and misuse of client funds as they struggled to find billions of dollars. missing assets Most Read from Bloomberg “Never in my career have I seen corporate controls fail so utterly and reliable financial information so utterly destroyed,” said John J. Ray III, the group’s new CEO, who had previously oversaw the liquidation of Enron Corp. affidavit submitted to bankruptcy court. Read the craziest parts of the new bankruptcy filing “From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, uninformed and potentially compromised individuals, this is unprecedented,” he added. The documents depict a rambling crypto startup devoid of nearly every policy and practice that would be the norm for nearly every other company. What’s more, they will help initiate any criminal and regulatory action against Bankman-Fried as FTX is already facing an investigation by US prosecutors. Bankman-Fried did not immediately respond to a request for comment. Disorganized record keeping and lack of organization will make the job harder for the many FTX consultants working round the clock to get back the billions of dollars clients owed. Ray didn’t punch in the statement, calling Bankman-Fried’s recent press releases “disorganized and misleading.” Advisors have told financial institutions to freeze withdrawals and reject all instructions from Bankman-Fried in attempts to raise FTX’s cash. The story continues Ray said advisors had found “only a fraction” of the digital assets they hoped to recover during Chapter 11 bankruptcy. So far, they have secured around $740 million worth of cryptocurrencies in offline cold wallets, a storage method designed to prevent hacking. Ray said the company’s audited financial statements should not be relied upon. Advisors are working to reconstruct the balance sheets of FTX assets from the bottom up, he added. According to Ray, FTX “did not maintain central control of its cash” and failed to maintain an accurate list of bank accounts and account signatories, or to pay enough attention to the creditworthiness of its banking partners. Advisors do not yet know how much cash the company had when it filed for bankruptcy, but so far they have found approximately $560 million attributable to various FTX entities. Ray said the company’s record keeping is so lax that consultants “were unable to compile a complete list of who works for the FTX Group by date of petition or terms of employment.” Among other alarming allegations in the filing: the software was allegedly used to hide misuse of client funds; Bankman-Fried’s trading company, Alameda Research, has been secretly exempted from some aspects of FTX.com’s trade policies; and according to court documents, a single unsecured group email was used worldwide to access private keys and sensitive data. Ray also pointed out that permanent decision-making records are difficult to access: Bankman-Fried often communicated through apps that were soon automatically deleted and asked employees to do the same. Ray said FTX Group’s corporate funds were used to purchase homes and other personal items for employees. He wrote that some of the real estate is registered in the personal names of employees and FTX consultants, and that the company’s payment controls are not suitable for a job. “For example, FTX Group employees submitted payment requests via an online ‘chat’ platform, where a different group of supervisors responded with personalized emojis and approved payments,” the statement said. A footnote in the documents shows Alameda Research Ltd., a subsidiary of the crypto trading house, lent $1 billion to Bankman-Fried and more than $500 million to FTX co-founder Nishad Singh as of September 30. transactions were not audited, produced while Bankman-Fried was checking the job, and Ray stressed that he did not trust their accuracy. FTX is now battling with Bankman-Fried over whether its empire should be placed under the jurisdiction of the US courts, where more than 100 associated companies have gone bankrupt, or its preferred location, the Bahamas. FTX’s legal team blamed the meltdown in part on poor oversight from outside U.S. regulators. Case is FTX Trading Ltd., 22-11068, US Bankruptcy Court for the District of Delaware. –With the help of Kyle Kim. Top Read from Bloomberg Businessweek 2022 Bloomberg L.P.
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