What FTX’s report reveals about firm under SBF’s leadership
- A new report released by FTX’s new management detailed the corporate failures under Sam Bankman-Fried.
- The management has located and secured $1.4 billion of lost funds.
Bahamas-based bankrupt crypto exchange FTX and its affiliated debtors recently released their first report. The 45-page report highlighted the control failures of FTX’s previous management, which included founder and former CEO Sam Bankman-Fried.
The report was put together after reviewing terabytes of electronic data and communications, more than a million documents and interviews with several former employees of the defunct crypto firm.
FTX report alleges hubris and incompetence
The report, which was filed in the U.S. Bankruptcy Court for the District of Delaware. A team of legal restructuring, forensic accounting, cybersecurity, computer engineering, cryptography, blockchain and other experts compiled it. It gave a detailed description of the shortcomings in critical areas of the company, including management and governance, finance and accounting, digital asset management, information security and cybersecurity.
According to the report, the FTX was tightly controlled by a small group of individuals who had little regard for proper oversight and corporate governance. The report claimed that these individuals misused both corporate and customer funds and cracked down on dissent. The exchange did not maintain proper financial or corporate records. Hubris, incompetence and greed were described as the root cause of the firm’s downfall.
It is interesting to note that on the day that FTX filed for chapter 11 bankruptcy, the firm didn’t even have a proper record of its employees. As for Alameda Research’s management, CEO Sam Bankman-Fried stated in an internal communication that the sister firm was:
“Hilariously beyond any threshold of any auditor being able to even get partially through an audit.”
So far, crypto assets worth $1.4 billion have been recovered and placed in cold storage. An additional $1.7 billion is in the process of being recovered.
John Ray III, the current chief executive of FTX, stated:
“We are releasing the first report in the spirit of transparency that we promised since the beginning of the Chapter 11 process. In this report, we provide details on our findings that FTX Group failed to implement appropriate controls in areas that were critical for safeguarding cash and crypto assets.”