FTX's New CEO Says Crypto Exchange Suffered 'Complete Failure of Corporate Controls'
John J. Ray III, who managed Enron after its collapse, calls the situation at FTX "unprecedented."
- Master's degree in environmental journalism
The new CEO of embattled crypto exchange FTX, John J. Ray III, helped manage the fallout from one of the most infamous financial collapses in the last several decades: that of Enron. But in a bankruptcy court filing Thursday, Ray called the situation at FTX a failure unlike any he's seen.
FTX, once the second-largest cryptocurrency exchange, filed for bankruptcy on Friday after a rival exchange, Binance, backed out of a deal to acquire it. Former FTX CEO Sam Bankman-Fried resigned and is said to be in the Bahamas.
Ray wrote in the bankruptcy court filing that "never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here."
"From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented," Ray wrote. Ray previously took control of Enron during its scandal and bankruptcy in the early 2000s.
It'll now be Ray's task to guide FTX through the bankruptcy process and the investigations into the company.
FTX also reportedly experienced a possible hack in which hundreds of millions of dollars in cryptocurrency apparently vanished. It remains to be seen if FTX customers will get back the money they deposited with the exchange.
Bankman-Fried, in an interview with Vox published Wednesday, called filing for bankruptcy a mistake and suggested he could've saved FTX if he'd maintained control of the company.