Reason for collapse FTX was named by new CEO
2022.12.13 11:42
Reason for collapse FTX was named by new CEO
Budrigannews.com – Shortly after FTX founder Sam Bankman-Fried was accused of defrauding investors by U.S. regulators on Tuesday, the company’s new chief executive told lawmakers that the crypto exchange’s implosion was caused by poor management practices and inexperienced individuals at the helm.
John Ray, who was appointed CEO of FTX after Bankman-Fried resigned and the company filed for bankruptcy on November 11, stated, “The FTX group’s collapse appears to stem from absolute concentration of control in the hands of a small group of grossly inexperienced, non-sophisticated individuals.”
Ray added that FTX and Alameda Research, Bankman-Fried’s crypto trading company that remained in close contact with his exchange, operated almost identically.
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“I’ve recently never seen a total absence of record keeping – definitely no inward controls at all,” Beam told the U.S. Place of Delegates Monetary Administrations Council.
Ray stated that it would take weeks, if not months, to secure all of the group’s assets.
Bankman-Fried was taken into custody in the Bahamas on Monday evening and was scheduled to appear before a magistrate on Tuesday. On Tuesday, U.S. federal prosecutors said that he had committed fraud and broken campaign finance laws. Additionally, U.S. regulators have filed additional charges against FTX’s founder and former CEO.
It is anticipated that Bankman-Fried will be extradited to the United States, according to the Bahamas attorney general’s office.
In his testimony, Ray stated that he had appointed a new chief financial officer, head of human resources and administration, and IT chief. Additionally, he has appointed a board of directors, which is headed by Joseph Farnan, a former U.S. Attorney.
Ray stated that he has established that customer assets at FTX and Alameda Research were mixed up since taking over as CEO. He claimed that margin trading with customer funds resulted in massive losses for customers.
Ray also discussed the reasons behind including FTX US in the bankruptcy filing. In interviews with the media, Bankman-Fried claimed that the company’s U.S. entity was financially sound but expressed confusion regarding that.
However, Ray stated that taking such a step was required to prevent a “run on the bank” and to enable the new leadership of FTX to identify and safeguard its assets.
The testimony of Bankman-Fried, who was also scheduled to appear before the committee on Tuesday, was highly anticipated.
Democratic U.S. Representative Maxine Waters (NYSE:), who presided over the panel, stated, “Unfortunately, the timing of his arrest denies the public the opportunity to get the answers they deserve.”
“Be assured that this committee will not stop until we discover the entire truth regarding the collapse of FTX just a few months ago.”
