New FTX chief rips former management
NEW YORK — The man who had to clean up Enron says the situation at crypto exchange FTX is even worse, describing what he calls a “complete failure” of corporate control.
A filing by John Ray III, the new CEO of the bankrupt cryptocurrency firm, lays out a damning description of FTX’s operations under founder Sam Bankman-Fried — from a lack of security controls to business funds being used to buy employees’ homes.
“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,” Ray said.
“From 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,” he said.
Ray was appointed CEO on Nov. 11, after the company was near collapse and its previous management sought legal counsel on what to do next. Bankman-Fried was persuaded to give up control of the company by his lawyers and his father, Joseph Bankman, a professor at Stanford Law School, according to Thursday’s filing.
Since his resignation, Bankman-Fried has sought out news outlets for interviews and has been active on Twitter trying to explain himself and the firm’s failure, but is also undermining efforts to reorganize the crumbling empire with “incessant and disruptive tweeting,” U.S. lawyers for FTX say in a separate court filing.
In an interview with Vox, Bankman-Fried admitted that his previous calls for regulation of cryptocurrencies were mostly for public relations. “Regulators, they make everything worse,” Bankman-Fried said, using an expletive for emphasis.
In a terse statement, Ray said that Bankman-Fried’s statements have been “erratic and misleading” and “Bankman-Fried is not employed by the Debtors and does not speak for them.”
Ray was named CEO of FTX less than a week ago when the company filed for bankruptcy protection and its CEO and founder Bankman-Fried resigned. In its bankruptcy filing, FTX listed more than 130 affiliated companies around the globe. The company valued its assets between $10 billion to $50 billion, with a similar estimate for its liabilities.