Bankruptcy lawyers for cryptocurrency exchange FTX have submitted 41 pages of legal documents on how Sam Bankman-Fried manages the company and the flaws on the company’s balance sheets.
The company’s lawyers submitted documents to the court in two parts, containing the evaluations of the new CEO of FTX, John Ray, about the company.
Court Documents Revealed About FTX
New CEO Ray said the following about the company’s situation:
“In my career, I’ve never seen corporate controls fail so badly and a lack of secure financial information.
“From a dangerous system to faulty regulatory oversight abroad, to the concentration of control in the hands of a very small, inexperienced and uninformed group, this is unprecedented.”
It has been claimed that SBF, the founder of FTX, does not know how much FTX US owes users. “As far as I know […] FTX US had enough money to reimburse all customers,” SBF tweeted on Nov. 15.
The balance sheet on the files shows FTX US’s assets are $1,360,665 and its liabilities are only 316,014. However, it is stated that SBF did not reflect some details in the financial statements.
Breach of Privacy
Ray stated that confidentiality was also violated in the company, saying the following.
“Unacceptable management practices included the use of an unsecured group email account to access secret private keys and critically sensitive data for FTX Group companies worldwide.”
Other problems include the lack of daily reconciliation of available positions, the use of software to hide misuse of client funds, and FTX.com’s covert exemption from certain aspects of its automatic liquidation protocol and lack of independent management.
SBF’s Management Is Also Criticized
The SBF’s tweeting with journalists, late-night messaging, and its constant “destructive” attitude were harshly criticized.
“Mr. This Chapter 11 case is unique in terms of Bankman-Fried’s reputation, unconventional leadership style, and incessant troubling tweets since the application was filed, and the lack of reliable company records.”
SBF also received a great response for the interview he gave to Vox recently. The former CEO of the company said that these statements were not made for the purpose of making them public.
However, it was stated that FTX has never had a functioning board until now.
“The appointment of directors will provide FTX Group with proper corporate governance for the first time.
FTX Staff Unaware
Many FTX employees were unaware of how dire the situation at the company was.
“Based on the information available to date, my view is that many employees of the FTX Group, including some senior executives, are unaware of the shortcomings. Those who suffer the most from these events are former employees and managers whose personal reputations and investments have been damaged.”
Lastly, Ray said that he sent his employees’ payment requests through a chat platform and that a group of supervisors gave approval to the employees using emoji.
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