In the filing, Ray disclosed that he did “not have confidence” in the accuracy of the balance sheets for FTX and its sister company Alameda Research, writing that they were “unaudited and produced while the Debtors [FTX] were controlled by Mr. Bankman-Fried.”
The document is a declaration from Ray in his new role as CEO of FTX and associated entities, which filed for bankruptcy last week in an implosion that left the crypto world reeling and investors shaken.
Ray excoriated Bankman-Fried and his management team for what were described as lackadaisical controls on systems and regulatory compliance.
“The concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals” was unprecedented, the former Enron recovery boss said.
Ray said a “substantial portion” of assets held with FTX may be “missing or stolen,” following widespread reports on social media of the theft of hundreds of millions in cryptocurrencies.
Bankman-Fried and FTX “management practices included the use of an unsecured group email account as the root user to access confidential private keys and critically sensitive data for the FTX Group companies around the world, the absence of daily reconciliation of positions on the blockchain, the use of software to conceal the misuse of customer funds.”
Bankman-Fried wasn’t immediately available for comment.
Sophisticated software was similarly used to conceal mismarked and fraudulent customer positions in the 2008 collapse of Bernie Madoff’s Ponzi scheme. [
link to www.cnbc.com (secure)]
Last Edited by Fairly Fucked on 11/17/2022 10:41 AM
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