close video Someone from FTX will be made an example of: Callahan
Daily Mail columnist Maureen Callahan joined “Fox Business Tonight” to discuss the collapse of crypto exchange FTX and what’s next for former CEO Sam Bankman-Fried.
Troubled cryptocurrency firm FTX updated its bankruptcy filing in Delaware on Thursday, and the document is chock-full of new insights into the chaotic and questionable business practices that occurred under the leadership of former CEO Sam Bankman-Fried.
John Ray III, who was appointed as FTX's new CEO a week ago and previously oversaw the bankruptcy of scandal-plagued energy firm Enron following its collapse in 2001, blasted Bankman-Fried's management of the company in the court document.
FTX'S SAM BANKMAN-FRIED COLLAPSE COMPARED TO ENRON, MADOFF
"Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here," Ray wrote.
Sam Bankman-Fried, founder and chief executive officer of FTX (Ting Shen/Bloomberg via Getty Images/File / Getty Images)
"From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented," he added.
Here's a look at some of the most notable deficiencies in FTX's business practices as revealed in the updated bankruptcy filing.Auto-Deleting Communications
According to the bankruptcy filing, Bankman-Fried communicated using applications that were set to auto-delete after a short period of time and also encouraged FTX's employees to do the same. Ray called this practice "One of the most pervasive failures" of FTX because it led to the "absence of lasting records of decision-making."
Ray went on to note that FTX employees are now "writing things down" and working with regulators to ensure there will be as much transparency as possible for investigations of the company's collapse.
NEW FTX BOSS CONDEMNS BANKMAN-FRIED FOR ‘COMPLETE FAILURE OF CORPORATE CONTROLS’Emoji Approvals for Employee Payments
FTX and Sam Bankman-Fried used "an on-line ‘chat’ platform where a disparate group of supervisors approved disbursements by responding with personalized emojis," the document explained.
Ray wrote in the filing, "[FTX] did not have the type of disbursement controls that I believe are appropriate for a business enterprise."
This illustration photo shows a smartphone screen displaying the FTX logo. (Olivier Douliery/AFP via Getty Images / Getty Images) Faulty Cash Management
Under Bankman-Fried's leadership, FTX didn't maintain a comprehensive list of its bank accounts. As a result, Ray stated that the firm doesn't yet "know the exact amount of cash" that FTX had when it filed for bankruptcy.
Ray wrote that the company is getting in touch with banks that they believe may have some of its cash. Those banks "have been instructed to freeze withdrawals and alerted not to accept instructions from Mr. Bankman-Fried or other signatories."
INSIDE THE COLLAPSE OF CRYPTO EXCHANGE FTX: EVERYTHING YOU NEED TO KNOWCorporate Funds Used to Buy Homes and Personal Items
The lax oversight of FTX's finances and bank accounts resulted in the use of corporate funds for the purchase of homes and other personal property for employees and advisers.
Sam Bankman-Fried, founder and chief executive officer of FTX, is shown during the Bloomberg Crypto Summit in New York. (Jeenah Moon/Bloomberg via Getty Images / Getty Images)
"In the Bahamas, I understand that corporate funds of the FTX Group were used to purchase homes and other personal items for employees and advisors," wrote Ray. "I understand that there does not appear to be documentation for certain of these transactions as loans, and that certain real estate was recorded in the personal name of these employees and advisors on the records of the Bahamas."
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Ray's filing with the bankruptcy court indicated that under Bankman-Fried, FTX's human resources operations were mixed between internal employees and outside contractors "with unclear records and lines of responsibility."
Because of this, Ray wrote that FTX has "been unable to prepare a complete list of who worked for the FTX Group" at the time of its bankruptcy filing or the terms of their employment. "Repeated attempts to locate certain presumed employees to confirm their status have been unsuccessful to date," the updated filing noted.