The crypto scene recently experienced the most spectacular collapse in the history of virtual currencies with the end of FTX and an insolvency administrator is now taking care of the transaction. But he can’t believe what he’s seeing.
FTX is broke. This news has caused quite a stir in the recently crisis-ridden world of cryptocurrencies. Because the company founded by Sam Bankman-Fried has made an incredible rise, but the fall was just as spectacular, mind you in a negative sense.
John Ray is now taking care of FTX as the new CEO, but this is not a classic Chief Executive Officer, but an insolvency administrator as we understand it. Because FTX filed for bankruptcy on November 11th and Ray is now in charge of salvaging what can still be salvaged. But the veteran manager, who has led Enron’s resolution, is downright shocked by what he saw at FTX.
As reported by Reuters, Ray said in a court statement that the oversight, security, and corporate governance shortcomings he found were greater than in any other such case he has overseen in his 40 years as a bankruptcy specialist, including Enron .
The insolvency expert is downright shocked and writes: “Never in my professional career have I experienced such a failure of corporate controls and such a lack of trustworthy financial information as here.”
Bankman-Fried, who portrayed himself as a big-time philanthropist who prefers giving his money away, has used $10 billion in client money to shore up his hedge fund, Alameda Research. This ultimately led to the insolvency of FTX.
The chaos and scale of infidelity that Ray documents are astonishing: FTX funds were used, among other things, to buy houses and other personal belongings for employees and consultants. Many transactions were not or only insufficiently documented. Ray’s task is not an easy one, as FTX is in fact a corporate network that is largely based in tax havens.
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