New FTX CEO Describes 'Complete Failure of Corporate Controls' in Scathing Court FilingsPlus: Twitter is alive and well, the U.K. considers unprecedented tax hikes, and more...
CHRISTIAN BRITSCHGI
11.18.2022
The latest revelations about collapsed cryptocurrency exchange FTX show a company that was even more shambolically managed than was known or even thought possible. "Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information," said John Jay Ray III, the new FTX CEO who's been appointed to oversee the company's bankruptcy, in Thursday court filings.
Ray, a veteran of corporate bankruptcies including Enron, described the management practices of FTX and its related companies as "unacceptable," "unprecedented," and "historical" (but not in a good way).
Sensitive customer information was kept on unsecured email servers. The company lacked a complete record of its bank accounts and a complete list of its employees. Expenses were approved by a shifting group of supervisors, who often signed off on reports with personalized emojis. FTX funds were used to purchase homes and other personal items for company executives, and complete records of those transactions weren't kept. Company executives also communicated with auto-deleting chat software, making a complete accounting of decisions impossible.
Throughout the filings, Ray stresses that records provided by FTX and its related companies while it was under the control of former CEO Sam Bankman-Fried couldn't be counted on to be accurate. He also questioned the reliability of audits performed of FTX-linked companies by Prager Metis, an accounting firm that claims to be the "first-ever CPA firm to officially open its Metaverse headquarters in the metaverse platform Decentraland."
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Source:
https://reason.com/2022/11/18/new-ftx-ceo-describes-complete-failure-of-corporate-controls-in-scathing-court-filings/
