SBF and Gary Wang and former engineering director at FTX Nishad Singh, had the "final voice in all significant decisions," said John Ray III.

FTX Debtors Outline Control Failures in a New Report

  • FTX debtors released their first report identifying and discussing control failures by the crypto trading platform’s previous management team.
  • The report is based on the review of terabytes of electronic data along with over one million documents and interviews with 19 former employees.
  • In a filing submitted in a Delaware bankruptcy court, the current FTX CEO said that the exchange was run by three inexperienced people “not long out of college.” 
  • SBF, along with co-founder Gary Wang and former engineering director Nishad Singh, had the “final voice in all significant decisions,” claims John Ray III.

The collapse of defunct crypto exchange FTX under the leadership of Sam Bankman-Fried, also known as SBF in the crypto space, shook the industry for months, and now, the debtors have released their first report identifying and discussing control failures by the crypto trading platform’s previous management team in critical areas like management and governance, finance and accounting, digital asset management, information security, and cybersecurity. 

According to a release, the report is based on the review of terabytes of electronic data and communications, along with over one million documents and interviews with 19 former FTX Group employees. It is crucial to note that “this work was undertaken by the debtors through a team of legal, restructuring, forensic accounting, cybersecurity, computer engineering, cryptography, blockchain, and other experts.”

John J. Ray III, the CEO and Chief Restructuring Officer of the disgraced company, said that the report is being released in the spirit of transparency that was promised from the beginning of the Chapter 11 process, while adding that “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.”

“FTX Group was tightly controlled by a small group of individuals who falsely claimed to manage FTX Group responsibly, but in fact showed little interest in instituting oversight or implementing an appropriate control framework. We are continuing our efforts to review the events that factored into the fall of FTX and to identify and recover as much value as possible for creditors,” said the executive. 

The report is “expected to be the first in a series regarding pre-petition events and issues that preceded the Chapter 11 cases,” claims the release. Furthermore, in an April 9 court filing submitted in a Delaware Bankruptcy Court, Ray stated that the crypto exchange was run by three inexperienced people “not long out of college.” 

Ray stated that the three people responsible for running FTX “relied on a hodgepodge of Google documents, Slack communications, shared drives, and Excel spreadsheets” to manage the firm’s assets and liabilities. The Chief Restructuring Officer said that his restructuring team “identified extensive deficiencies in the FTX Group’s controls.”

Bankman-Fried, along with co-founder Gary Wang and former engineering director Nishad Singh, had the “final voice in all significant decisions,” claims Ray, while adding that the three had very limited experience.

“These three individuals, not long out of college and with no experience in risk management or running a business, controlled nearly every significant aspect of the FTX Group,” he said.

Brett Harrison, the former president of the US arm of the crypto exchange, raised concerns with SBF and Singh regarding “the lack of appropriate delegation of authority, formal management structure, and key hires at FTX.US.”

Harrison also added that SBF was emotionally volatile, avoided conflict, pushed back against criticism, and even isolated him from key decision-making. On the other hand, Bankman-Fried is currently on house arrest and is banned from accessing and using online messaging applications as a part of new bail conditions imposed by US District Judge Lewis Kaplan.

Parth Dubey
Parth Dubey Verified Author

A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.

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