FTX CEO accuses former leadership of favouring Alameda Research

The new FTX chief executive, John Ray, accused Sam Bankman-Fried and other former executives of concealing the illicit use of customer funds and a ‘secret release of Alameda Research from certain aspects of the auto-liquidation protocol’ on the platform.

In the заявлении в суд for bankruptcy filings, the current head of the exchange stressed that he has decades of experience in corporate restructuring. As examples, he cited Enron, Nortel and Overseas Shipholding.

“Nearly every situation I’ve been involved in was characterised by some shortcomings in internal controls, compliance, human resources management and integrity of systems. But in my career I have never seen such a complete failure of corporate governance and an absolute lack of reliable financial information,” he described the state of affairs.

Ray noted that the group, not only large by the scale of the crypto industry, lacked a dedicated accounting department. These services were outsourced.

“FTX Group did not have centralized cash control. Procedural violations in money management included the absence of an exact list of bank accounts and the people who signed them,” he added.

According to him, FTX Group violated accounting rules. In particular, the exchange did not include client liabilities in its reporting.

According to the document, Euclid Way Ltd., controlled by Alameda Research, extended a loan of $2.3 billion to Paper Bird Inc., which is owned by Bankman-Fried. The venture firm itself also lent:

• $1 billion — to the group’s head;
• $543 million — to FTX co-founder Nishad Singh;
• $55 million — to co-CEO Ryan Salame.

Corporate funds were also used to purchase real estate in the Bahamas for the residence of executives and advisers.

There was no corporate governance in the company’s divisions — boards of directors were scarcely convened. All decisions were taken by a small circle led by Bankman-Fried and two co-founders, Ray said.

To aid restructuring, Ray subdivided the business into four units by line of business. He assessed that two of them were insolvent — those tied to exchange activity (FTX.com) and trading (Alameda Research).

The lack of reliable data prevents determining the share of the digital assets on the accounts worth $740 million held by the various units, Ray noted.

At the same time he noted that the fair value of the digital assets of FTX Trading Ltd, which includes the global exchange FTX and other trading platforms registered outside the United States, stands at $659,000.

Earlier John Ray urged not to rely on Bankman-Fried’s tweets, as he can no longer speak for FTX and affiliated entities.

As reported in Fortune, lawyers said that the US DOJ has all the necessary tools to bring criminal charges against Bankman-Fried and other executives of the failed exchange.

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