“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information,” John J. Ray III, the group’s new chief executive officer who formerly oversaw the liquidation of Enron, said in a sworn declaration submitted in bankruptcy court.
Claims in new bankruptcy documents include:Corporate funds of FTX Group were used to buy homes and other personal items for employeesBankman-Fried often communicated through applications that auto-deleted in short order and asked employees to do the same
In their attempts to round up FTX’s cash, advisers have told financial institutions to freeze withdrawals and reject any instructions from Bankman-Fried. The company’s audited financial statements — some of which were done by a firm that touted itself as the first CPA to open an office in the metaverse — should not be trusted, Ray said.FTX “did not maintain centralized control of its cash” and failed to keep an accurate list of bank accounts and account signatories, or pay sufficient attention to the creditworthiness of banking partners, according to Ray.
Among other alarming claims in the filing: software was allegedly used to conceal the misuse of customer funds; Alameda Research, Bankman-Fried’s trading firm, was secretly exempt from some aspects of FTX.com’s trading policies; and a single, unsecured group email was used to access private keys and sensitive data around the world, according to the court documents.
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