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FTX doesn't know where its money is housed

Lucinda Shen
Nov 17, 2022
Illustration of a pitchfork spearing a digital coin with pieces falling away

Illustration: Sarah Grillo/Axios

"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’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."
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