New FTX CEO In Testimony


With Sam Bankman-Fried under arrest in the Bahamas and facing possible extradition to face criminal charges in the U.S., an upcoming hearing in the US House of Representatives could offer damning details.

“FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals,” John Jay Ray III, the current CEO of FTX who was appointed after Bankman-Fried’s dismissal, noted in his written testimony ahead of the hearing. Ray is a bankruptcy expert who has previously worked on the Enron case.

Once the second largest crypto exchange in the world, FTX collapsed in spectacular fashion after concerns arose about the assets it held on its balance sheet. Alameda Research, a hedge fund within the FTX group, also played a starring role in the collapse by making large and illiquid investments that worsened the group’s financials when the bets went south.

Alameda was allowed to borrow funds held at—the exchange—to be utilised for its own trading or investments, according to Ray’s testimony. The hedge fund also used customer funds to engage in margin trading which exposed customers to massive losses, the testimony added.

While Bankman-Fried made numerous media appearances in the past couple of weeks and offered explanations about what happened, Ray’s testimony elides any mention of his public defence.

“I will not comment on his statements other than to say that this is a professional investigation that is proceeding in a professional manner,” Ray noted in the statement.

Other glaring issues at FTX enlisted by Ray include:

  • Customer assets from were commingled with assets from the Alameda trading platform.

  • Loans and other payments worth over $1 billion were made to insiders.

  • The company used computer infrastructure that gave individuals in senior management access to systems that stored customer assets, without security controls to prevent executives from redirecting them.

  • A complete lack of documentation for transactions involving nearly 500 investments made with FTX Group funds and assets.

  • Lack of personnel in financial and risk management functions.

While the U.S. authorities are yet to declare the specific charges Bankman-Fried will face, he is likely to be charged with wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering, according to a report from The New York Times.


Source link

What is your reaction?

In Love
Not Sure

You may also like

Comments are closed.

More in:Business