FTX doesn't know where its money is housed
"Never in my career have I seen such a complete failure of corporate controls," John Ray III, the new FTX CEO and chief restructuring officer, wrote in a Thursday bankruptcy filing.
Why it matters: That career spans 40 years, including his work with Enron. Ray's remarks highlight the complex task ahead of figuring out where all of FTX's leftover assets are actually housed.
Details: According to Ray, FTX failed to maintain an accurate list of bank accounts and account signatories. It has also failed to keep "appropriate books and records" of its digital assets.
- "I do not have confidence in it, and the information therein may not be correct as of the date stated," Ray wrote several times about FTX's various financial statements.
- Notably, Alameda Research made three loans to FTX executives: a $1 billion loan to former FTX CEO Sam Bankman-Fried, a $543 million loan to co-founder Nishad Singh, and a $55 million loan to FTX Digital Markets Co-CEO Ryan Salame.
Of note: The filing also points to unacceptable management practices in the SBF-era, including using software to conceal the misuse of customer funds, and the secret exemption of Alameda — FTX's sister company — from parts of FTX.com’s auto-liquidation protocol.
Bottom line: Ray is trying to distance FTX now from Bankman-Fried and that tumultuous era when its bookkeeping was shoddy and corporate controls were absent.
- "Finally, and critically, the Debtors have made clear to employees and the public that Mr. Bankman-Fried is not employed by the Debtors and does not speak for them."