The liquidator presiding over the FTX Chapter 11 bankruptcy was also in charge of the Enron liquidation process. He states that the mess at FTX is “unprecedented”.
More than 20 years ago, the accounting scandal and resulting collapse of the then seventh biggest company in the US was one of truly epic proportions.
Back in 2001 the energy giant Enron was exposed for hiding huge losses in an accounting cover-up. Today, the very same person who presided over the ensuing bankruptcy has been given the task of guiding FTX through Chapter 11.
It could be said that John Ray III might have seen it all over his career thus far. However, his comments on the “unprecedented mess” left by Sam Bankman-Fried make grim reading.
The Chapter 11 bankruptcy filed on Thursday included comments by Ray that damned the FTX management for a “complete absence of trustworthy financial information” and “compromised systems integrity.”
According to an article on the subject by Entrepreneur, Ray was cited as stating:
“Unacceptable 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, the secret exemption of Alameda from certain aspects of FTX.com’s auto-liquidation protocol, and the absence of independent governance as between Alameda (owned 90% by Mr. Bankman-Fried and 10% by Mr. Wang) and the Dotcom Silo (in which third parties had invested).”
One of the worst issues underscored by Ray was the fact that decision making-records were not available. Ray explained:
“Mr. Bankman-Fried often communicated by using applications that were set to auto delete after a short period of time, and encouraged employees to do the same.”
Ray is now faced with having to check the accounts of debtors who would have recorded dealings.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Sourced from cryptodaily.co.uk.
Written by Laurie Dunn on 2022-11-18 15:28:38.
