New CEO of crypto exchange FTX finds ‘unprecedented mess’

AFP

NOS News

  • Nando Kastelein

    editor Tech

  • Others Meinema

    Reporter economy

  • Nando Kastelein

    editor Tech

  • Others Meinema

    Reporter economy

The new CEO of crypto trading platform FTX has wiped the floor with the company’s business operations under his predecessor. According to CEO John Ray, who has led the company since late last week, the company’s records are completely unreliable.

FTX has run into major financial problems in a short period of time and is missing billions of dollars. Sources have told Reuters that at least $1 billion in customer money has been lost. FTX has now applied for a postponement of the payment, and there is great uncertainty as to whether the customers who traded via the platform will see some of their money again.

Unprecedented situation

“Never in my career have I seen such a complete failure of corporate control and no reliable financial information available,” says Ray, who has 40 years of experience in legal matters and corporate restructuring. “This situation is unprecedented.” That statement from Ray’s mouth is telling. More than twenty years ago, he was appointed administrator of the energy giant Enron; one of the biggest accounting scandals in American history.

Ray makes his statements in a document (.pdf) that is part of the legal process involved in applying for a stay of payment. Here he explains what he has found at the company since last Friday. In summary, it’s an unprecedented mess.

The new managing director has divided the FTX group – which consists of dozens of companies – into four groups. Ray says he distrusts the financial records of each of these groups. It is also unclear how much money the group still has in cash. 740 million dollars in crypto have so far been found belonging to one of the four components. This is “a fraction” of what one hopes to find.

The number of employees unclear

Many companies in the FTX group did not have the right management structure that is necessary for healthy business operations. The group also does not have its own accounting department, this was outsourced to the company. One of the most striking conclusions is that Ray has failed to compile a “complete list of who works for the FTX Group and the benefits associated with it”.

According to the new CEO, many employees of FTX Group, including people from the top management, were not aware of the financial problems. Ray emphasizes that this group has been hit hard by the scandal; they have lost personal investment in the company and their reputations have been damaged.

Ray is perhaps most concerned about the lack of data on board decision-making. “Bankman-Fried (the old FTX top man, ed.) was in contact via apps that automatically deleted messages after a short time and encouraged employees to do the same”. The new CEO is also critical of the founder himself. “He continues to make erratic and misleading statements.”

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