New FTX CEO says crypto disaster worse than Enron

FTX’s new boss said the firm’s corporate governance under disgraced ex-CEO Sam Bankman-Fried was the worst he’s seen in his career — including his stint cleaning up the mess at Enron.

FTX CEO John Ray III — an insolvency expert who steered energy firm Enron through its infamous $23 billion bankruptcy following a massive accounting scandal — ripped his predecessors in a scathing court filing on Thursday.

“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,” Ray said, according to the Financial Times.

“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 added.

Samuel Bankman-Fried
Sam Bankman-Fried resigned as FTX’s CEO.
CQ-Roll Call, Inc via Getty Imag
The founder of FTX, Sam Bankman-Fried, has seen his net worth go from $16 billion to zero.
The founder of FTX, Sam Bankman-Fried, has seen his net worth go from $16 billion to zero.
Bloomberg via Getty Images

Ray was tapped to replace Bankman-Fried as FTX’s CEO after a liquidity crisis forced the former cryptocurrency sector darling into insolvency. FTX, its sister cryptocurrency trading firm Alameda Research and more than 100 affiliates were forced to file for bankruptcy.

Ray declared last week that FTX was cooperating with both law enforcement and regulatory officials and making “every effort” to recover assets.

Shortly before the company filed for bankruptcy, Bankman-Fried admitted that he had “f—ked up” and misjudged the state of FTX’s finances. Just days before the company’s collapse, the ex-billionaire was insisting that client funds were safe.

But Bankman-Fried remained defiant in a wild interview with Vox this week, telling a reporter that filing for bankruptcy was his “biggest single f–kup” and stating, “f–k regulators.”

Bankman-Fried was part of a closely knit group of 10 roommates who led FTX and Alameda from a penthouse in the Bahamas. The roommates were said to be romantically linked, sparking online gossip that they were all members of a “polycule” — a network of polyamorous relationships.

The bankruptcy marked a stunning fall for FTX, which was valued at $32 billion as recently as last January, and for Bankman-Fried, who had tried to portray himself as the face of a burgeoning cryptocurrency movement.

Sam Bankman-Fried stepped down as CEO on Friday of the Bahamas-based firm.
Sam Bankman-Fried stepped down as CEO of the Bahamas-based firm on Friday.

Bankman-Fried and his associates face mounting legal and regulatory pressure following revelations that FTX secretly shifted $10 billion in client funds to prop up Alameda. At least $1 billion of those funds is still missing, according to Reuters.

On Wednesday, Bankman-Fried and FTX’s celebrity backers, including NFL legend Tom Brady and NBA superstar Stephen Curry, were named in a class-action lawsuit related to FTX’s downfall.

Bankman-Fried’s estimated net worth went from $16 billion to zero after his firm cratered.

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