{"id":274673,"date":"2022-11-17T22:09:56","date_gmt":"2022-11-17T22:09:56","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=274673"},"modified":"2022-11-17T22:39:03","modified_gmt":"2022-11-17T22:39:03","slug":"new-ftx-ceo-john-rays-statement-on-bankruptcy-case-tells-tale-of-an-unmitigated-disaster","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/new-ftx-ceo-john-rays-statement-on-bankruptcy-case-tells-tale-of-an-unmitigated-disaster\/","title":{"rendered":"New FTX CEO John Ray’s statement on bankruptcy case tells tale of an unmitigated disaster"},"content":{"rendered":"

FTX's fall from grace this week culminated in the company filing for Chapter 11 bankruptcy<\/a> on Nov. 11. The filing includes all 130 companies<\/a> under the umbrella, as well as the trading firm Alameda.<\/p>\n

On announcing the news, Sam Bankman-Fried resigned from his position as CEO. John Ray, who oversaw Enron following its accounting scandal in 2007, took charge following SBF's resignation.<\/p>\n

Commenting on the bankruptcy, Ray said the Chapter 11 filing would provide relief and allow for a thorough assessment of the situation to maximize recoveries for all stakeholders.<\/p>\n

Chapter 11<\/a> filings enable a company to continue trading and are usually implemented in business restructuring cases.<\/p>\n

A ‘complete failure'<\/span><\/span><\/h2>\n

Ray filed the Chapter 11 Petitions and First Day Pleadings<\/a> with the Bankruptcy Court of Delaware on Nov. 17.<\/p>\n

Having gone through FTX's books, Ray blasted the previous company administration, saying he has never come across “such a complete failure of corporate<\/span> controls and such a complete absence of trustworthy fin<\/span>ancial information.”<\/span><\/span><\/p>\n

In particular, he pointed out <\/span>compromised systems integrity, faulty regulatory oversight abroad, and concentration of <\/span>control in the hands of a very small group – all of which were inexperienced and incapable of running an operation the scale of FTX.<\/span><\/span><\/p>\n

Ray said:<\/p>\n

“The FTX Group did not maintain centralized control of its cash. Cash management procedural failures included the absence of an accurate list of bank accounts and account signatories, as well as insufficient attention to the creditworthiness of banking partners around the world. Under my direction, the Debtors are establishing a centralized cash management system with proper controls and reporting mechanisms.”<\/p><\/blockquote>\n

The aftermath<\/h2>\n

The businesses were divided into four groups or silos to manage the bankruptcy process. For each Silo, Ray included an unaudited balance sheet as of Sep. 30, 2022. A summary is as follows:<\/p>\n

West Realm Shires Inc. Silo<\/span><\/span> (WRS)<\/strong> includes FTX U.S., LedgerX, <\/span><\/span>FTX US Derivatives, <\/span><\/span>FTX <\/span><\/span>U.S. Capital Markets and<\/span><\/span> Embed Clearing, among other entities.<\/span><\/span><\/p>\n