This Was Going On For Years

The current CEO of failed crypto exchange FTX, John Ray, showed his face and shed light on the company’s operations. Ray was appointed as part of the exchange’s bankruptcy proceeding to lead the investigation surrounding recent events. 

The U.S. Congress House Financial Services Committee summoned John Ray to testify. The former CEO of FTX and co-founder Sam Bankman-Fried (SBF) appeared before this entity in 2022. At that time, SBF spoke about regulations and was considered one of the crypto industry advocates in Washington. 

Now, Bankman-Fried was arrested. The former executive could face life in prison due to his involvement in the FTX saga for defrauding his customers, creditors, and even the politicians speaking with the current FTX CEO. 

FTX Had No Risk Management Practices

According to Ray’s testimony, FTX operated as “one company” with little distinction between its operations and “who controlled” them. The current FTX CEO reiterated that the collapse of this company is one of the worst cases in his career. 

As Bitcoinist reported, Ray has been involved in many restructuring cases, including the implosion of energy giant Enron. Ray told the Committee that the former FTX CEO, SBF, took on “multiple” loans from the company due to poor management practices. 

In some instances, SBF appears as both issuer and recipient of these liabilities. The company provided SBF with these loans without reason. Ray said: “There were virtually no internal controls whatsoever.”

The commingling of funds, poor (or nonexistent) management and risk management practices, and the overall disarray on FTX “went on for years,” Ray believes. From much before its collapse and bankruptcy filing protection. 

The company’s CEO added: 

There was no sophistication whatsoever. There was an absence of any management. You need records, you need controls, and you need to separate people’s money. It’s simple.

It Could Take Years To Make Clients’ Whole

SBF was supposed to testify before this Committee before he was arrested. The former FTX CEO contributed millions to U.S. politicians, probably using customer funds. These events will be part of the ongoing investigation, Ray clarified. 

The entire process might take years, according to his testimony. So far, the company has recovered over $1 billion in assets and plans to sell LedgerX and other FTX companies. The entire process has been “unprecedented.”

The current FTX CEO clarified that his priority is to recover assets and mitigate losses for FTX customers. Ray told the Financial Services Committee:

I, along with a comprehensive team, including experts and consultants with a wide array of relevant skills, are now working on behalf of the FTX Group to achieve one fundamental goal: maximizing value for FTX’s customers and creditors so that we can mitigate, to the greatest extent possible, the harm suffered by so many.