More disastrous than Enron! FTX’s new boss thinks it’s the worst company he’s ever seen

More disastrous than Enron! FTX’s new boss thinks it’s the worst company he’s ever seen

The new CEO of defunct cryptocurrency startup FTX, a seasoned financial specialist, has provided a scathing assessment of the company’s previous leadership, comparing their ‘extraordinary’ mistakes to those of Enron’s executives and expressing his disbelief at the disarray and irresponsibility he discovered.

 

John Ray III was appointed as the new CEO of the bankrupt cryptocurrency company on November 11 after the 30-year-old founder Sam Bankman-Fried was convinced to step down by his lawyers and his father.

Joseph Bankman-Fried is a professor at Stanford Law School.

Ray, who has 40 years of expertise dealing with failed companies, filed bankruptcy paperwork on Thursday that revealed the extent of the dysfunction.

Ray stated, “Never in my experience have I witnessed such a complete lack of corporate controls and unavailability of reliable financial information as occurred here.”

From weakened system integrity and inadequate regulatory oversight overseas to the concentration of responsibility in the hands of a relatively small group of inexperienced, naive, and potentially corrupted persons, this situation is unusual.

It was recently projected that Bankman-Fried is worth $23 billion. Forbes and Bloomberg report that his net worth has essentially vanished.

Ray revealed why he was hired and stated that his previous experience with mismanagement had not prepared him for the chaos at FTX.

He stated, “I have over four decades of legal and restructuring experience.”

I have served as the Chief Restructuring Officer or Chief Executive Officer for a number of the largest company failures in history.

I have managed scenarios involving unique financial structures (Enron and Residential Capital) as well as cross-border asset recovery and maximization (Nortel and Overseas Shipholding).

Nearly every circumstance in which I’ve been involved has been marked by flaws in internal controls, regulatory compliance, human resources, and system integrity.

Ray stated that FTX was the worst case he had ever encountered.

Since his departure, Bankman-Fried has sought out interviews with media outlets and been active on Twitter in an attempt to explain himself and the firm’s failure.

In an interview with the online news source Vox, Bankman-Fried stated that his prior requests for regulation of cryptocurrencies were primarily public relations efforts.

“Regulators, they make everything worse,” Bankman-Fried stated emphatically, adding an expletive.

Ray stated in a brief statement that Bankman-assertions Fried’s were “erratic and deceptive” and that “Bankman-Fried is not employed by the Debtors and does not speak on their behalf.”

Ray observed that many FTX Group firms, especially those in Antigua and the Bahamas, lacked proper corporate governance, and many had never held a board meeting.

Ray also discussed the utilization of company funds to pay for employees’ homes and other items.

According to my knowledge, FTX Group corporate monies were utilized in the Bahamas to acquire homes and other personal assets for workers and advisors.

“I understand that there appears to be no paperwork for some of these transactions as loans, and that certain real estate was recorded in the personal names of these workers and advisors,” he stated.

DailyMail.com disclosed on Thursday that Bankman-Fried recruited a former senior financial regulator known as “Crypto Dad” to secure a meeting with the chairman of the SEC.

Christopher Giancarlo, the former chairman of the Commodity Futures Trading Commission, was hired by the firm of the crypto millionaire to set up a ‘formal introduction’ with SEC chair Gary Gensler in October 2021.

Bankman-Fried and Gensler reportedly met for the first time in March to discuss a cryptocurrency trading platform that may be allowed by the SEC.

It indicates that the SEC chairman met Bankman-Fried at least twice, which will put Gensler under pressure to explain their relationship and his failure to avert the FTX problem.

On account of his meetings with Bankman-Fried, Gensler is claimed to be ‘in a corner,’ and members of Congress want him to explain how FTX’s collapse, which cost investors billions of dollars, could occur under his watch.

Giancarlo, a lawyer who resigned from the CFTC in 2019, was dubbed “Crypto Dad” by bitcoin aficionados due to his positive outlook on the technology.

In 2021, he attended the meeting as an attorney for Willkie Farr & Gallagher.

Earlier on Thursday, DailyMail.com uncovered that Bankman-ex-girlfriend, Fried’s whom he blamed for the collapsed FTX crypto exchange, had written about being polyamorous and wanting to be part of a “imperial Chinese harem.”

In February 2020, Caroline Ellison, the chief executive officer of FTX subsidiary business Alameda Research, announced on her Tumblr account that she had a “foray into poly,” referring to the practice of having many partners.

She stated that everyone in a polyamorous relationship should have a ranking of their partners and engage in “vicious power battles for better positions.”

Ellison also stated that ‘cute’ partner attributes included ‘ruling the majority of major international nations’ and’sufficient strength to physically dominate you.’

In an additional March piece, she stated, ‘I didn’t enter into crypto as a sincere believer. When you get down to it, it’s largely scams and memes.

It is rumored that Ellison dated Bankman-Fried when they and eight other business associates stayed in a house in the Bahamas.

According to a story on Coindesk, all ten of them were in romantic relationships, however it is unclear if they were monogamous or not.

Ellison used the username Worldoptimization on her now-deleted Tumblr.

She stated, “When I first began my adventure into poly, I viewed it as a dramatic departure from my traditional heritage. However, I’ve come to the conclusion that the only appropriate type of poly is best described as “imperial Chinese harem.”

Everyone should have a ranking of their partners, everyone should be aware of their position on the ranking, and there should be ferocious power struggles for the upper ranks.

Another anonymous user challenged her in a post, “Why is monogamy so essential to you when you’re surrounded by non-monogamous people?”

Ellison wrote that she lacked a suitable reaction.

In a another piece, Ellison posted what she considered to be “some cute boy stuff.”

She wrote, “Controlling the majority of the world’s major countries, being responsible for numerous significant inventions and scientific discoveries, having spatial reasoning skills, a low aversion to danger, and sufficient strength to physically overwhelm you.”

“You are valid if you are a boy who is driven to achieve big goals.

“You are valid if you are a boy who gets at opinions by logical reasoning.

“You are valid if you are a boy with the courage to advocate for uncommon ideas and perform actions based on them.”

Ellison appeared to joke on his blog that growing up in the 21st century was not a good period for sexual activity.

Born too late to have ten children and too early to have four-dimensional upload orgies, she wrote.

In other posts, Ellison argued that males were only meant to worry about physical appearance, a sweet and subservient disposition, and perhaps a few other things like as chastity and cooking ability.

She wrote: ‘However, it turns out that all the men who are interested in dating me only care about ‘intelligence’ and ‘knowing stuff about trading’ and ‘having good thoughts on social justice’ and other such qualities…I believe there’s probably a selection impact they were overlooking.

Ellison posted on her Tumblr site that she had ‘noticed several changes in my wants.’

She stated that she was artistically attracted to masculine more than femininity.

“I am less hedonistic and more masochistic,” she wrote. I derive a great deal of enjoyment from difficult, unpleasant, physically challenging, or emotionally painful activities.

Ellison also addressed the 2008 financial crisis and appeared sympathetic to the plight of the banks blamed for bringing the global economy to its knees.

She penned, “I can’t think of anyone whose actions should result in a lengthy prison sentence and a criminal record.”

Individuals’s initial reaction is likely to be, ‘A bunch of horrible things happened, let’s make them all illegal so they can’t happen again,’ but, in reality, the problem is a tangled jumble of slightly mismatched incentives and human mistake as opposed to evil people doing blatantly bad things.

Given the collapse of FTX, Ellison’s comments take on a new irony: ‘And when it comes to financial regulation, I don’t think you can even assume the charitable version, because the way a lot of financial regulation actually works is “bank does something bad, we decide after the fact that it’s bad and should probably be illegal, we fine them for something.”

Which circumvents the difficulty of drafting effective financial regulation. However, I’m still not a fan.

Bankman-Fried shockingly said that his devotion to ethics was a “front” and that he “feels horrible” for those who were “f***** by it.”

Gary Gensler, chairman of the Securities and Exchange Commission, is facing scrutiny over his association with the disgraced crypto wunderkind and the lack of oversight of the crypto sector, which Gensler himself has referred to as the Wild West.

Before his demise, Bankman-Fried attempted to convince regulators and lawmakers that cryptocurrency was a valuable asset that should be accepted by the public.

In contrast, in a recent interview with Vox, he screamed “f*** regulators” and accused them of making “everything worse.”

Authorities in the United States and the Bahamas, where FTX was headquartered and where Bankman-Fried is presently hiding, are contemplating the prospect of extraditing him for questioning in the United States.

The incident has produced a crisis of confidence in all cryptocurrencies and caused the value of assets, including Bitcoin, to plummet.

Last Monday, it was discovered that Bankman-Fried secretly transferred $10 billion of FTX customer funds to Alameda.

Approximately $2 billion of the $10 billion sent to Alameda is still missing, according to reports.

And now, a group of A-list celebrities who openly supported FTX have been sued in a $11 billion class action lawsuit.

Tom Brady, Gisele Bundchen, Shaquille O’Neal, Steph Curry, and Larry David are among the celebrities mentioned in the Florida lawsuit.

The rapid rise and swift downfall of crypto exchange FTX

Cryptocurrency exchange FTX has collapsed.

Here is a history of FTX since its foundation in 2019:

2019:

May – Former Wall Street trader Sam Bankman-Fried and ex-Google employee Gary Wang founded FTX, the owner and operator of FTX.COM cryptocurrency exchange.

2020:

August – FTX acquired mobile portfolio tracking application, Blockfolio for $150 million.

2021:

July – A $900 million funding round valued FTX at $18 billion.

September – FTX signed a sponsorship deal with Mercedes’ Formula 1 team.

October – FTX raised capital at a valuation of $25 billion from investors including Singapore’s Temasek and Tiger Global.

2022:

Jan. 27 – FTX’s U.S. arm said it was valued at $8 billion after raising $400 million in its first funding round from investors including SoftBank and Temasek.

Jan. 31 – FTX raised $400 million from investors including SoftBank at a valuation of $32 billion.

Feb. 13 – Larry David stars in Super Bowl commercial for FTX

April 26 – April 29 – Bankman-Fried is joined by celebrities including Tom Brady, Katy Perry, Tony Blair and Bill Clinton and the Crypto Bahamas conference.

June 4 – FTX signed a reportedly $135 million sponsorship deal for naming rights of the Miami Heat’s home court.

July 1 – FTX signed a deal with an option to buy embattled crypto lender BlockFi for up to $240 million.

July 22 – FTX offered a partial bailout of bankrupt crypto lender Voyager Digital. Voyager called it a ‘low-ball bid’.

July 29 – FTX said it won full approval to operate its exchange and clearing house in Dubai.

Aug. 19 – A U.S. bank regulator ordered crypto exchange FTX to halt ‘false and misleading’ claims it had made about whether funds at the company are insured by the government.

Sept. 9 – FTX’s venture capital fund said it would buy a 30% stake in SkyBridge Capital.

Nov. 2 – Crypto news website CoinDesk reported a leaked balance sheet that showed Alameda Research, Bankman-Fried’s crypto trading firm, was heavily dependent on FTX’s native token, FTT.

Nov. 6 – Binance CEO Changpeng Zhao said his firm would liquidate its holdings of FTT due to unspecified ‘recent revelations’.

Nov. 7 – Bankman-Fried said ‘FTX is fine. Assets are fine’.

Nov. 8 – FTT collapses by 72% as clients swamp the exchange with withdrawal requests. Binance offers a potential bailout in a non-binding deal.

Nov. 9 – Binance backs out of the rescue plan, saying: ‘As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com.’

Nov. 11 – Bankman-Fried resigns as CEO and FTX files for Chapter 11 bankruptcy

Nov. 13  Police in the Bahamas announce a team from its Financial Crimes Investigation Branch are investigating whether any criminal misconduct occurred.

Nov. 15 – Bankman-Fried continues to plead with investors for money to cover the firm’s losses and tweets that he’s ‘meeting in-person with regulators and working with the teams to do what we can for customers’

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