FTX chief John Ray talks about 'insane' FOMO and 'pack mentality'
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John Ray III, CEO of FTX. Photo: Nathan Howard/Getty Images
John Ray III, now at the helm of the collapsed crypto exchange FTX, says "pack mentality," "intellectual laziness" and poor corporate governance can lead to a company's downfall.
The big picture: "There's the fear of being left behind. It causes a panic. It's like a fever," Ray said in a fireside chat, explaining how so many investors might have missed what was going on at FTX.
- "Part of it is intellectual laziness," he said. "It's kind of insane, but when a reputable company makes an investment, everyone seems to fall in line."
- Of note: His remarks are not the official views of FTX.
What's happening: The CEO of FTX donned a black suit, a blue collared shirt with silver cufflinks and well-worn shoes — starkly contrasting former chief Sam Bankman-Fried's preferred uniform of t-shirts and shorts — at a Debtwire-hosted event in downtown Manhattan on Thursday.
The intrigue: Ray said he often gets asked how FTX's collapse could have been prevented.
- "How about you have a board of directors?" he said, listing "the basics" that crypto shops could've followed, like proving reserves, showing liabilities, and conducting regular audits.
Case in point: FTX's subsidiary in Japan had segregated accounts and audited financials, enabling the company to return "every single penny to customers."
- He named Japan's regulatory scheme as "one of the models."
Of note: Regarding regulation, "here in the U.S. we're obviously in for changes," he said. "The regulatory scheme is only trying to catch up — doing so in the face of an industry that is changing every day."
- He predicted there may be "an over-complicated regulatory structure that will come out of this, that'll be given birth by these kinds of tragedies."
- "That's the natural evolution of an industry," he said.
What's next: FTX will file its reorganization plan with the bankruptcy court by July 31, with the goal of getting creditor and court approval for the plan within the next year, Ray said.
