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Bankman-Fried borrowed 1bn from FTX.

John Ray, the veteran expert handling the insolvency, said in court documents that he had never seen anything like the «complete failure of corporate controls and such a complete absence of trustworthy financial information» as in the case of the crypto business. Ray, known for his work on the demise of Enron, the collapsed energy group, has outlined the transaction in court documents published after the crypto exchange collapsed last week. FTX was the world’s second-largest cryptocurrency exchange before doubts about its finances and customer withdrawals totalling $6 billion led to its collapse. Alameda Research was FTX’s hedge fund that traded and speculated on digital assets.

Bankman-Fried owned 90 per cent of the fund, and Caroline Ellison, his now former girlfriend, moved to the unit in March 2018 before becoming its chief executive in August this year. Court documents revealed Alameda Research was owed money by individuals and companies linked to the group worth $4.1 billion when FTX collapsed, including a $1 billion loan to Bankman-Fried, a $543 million loan to Nishad Singh, his co-founder, and a $55 million loan to Ryan Salame, a senior executive. In the documents, Ray describes a picture of careless and slovenly practices at the business, ranging from handling sensitive information and finances to human resources. FTX was a business where payment controls were almost absent, with requests for funds being submitted through an online chat platform and approved with emojis by a «disparate» group of supervisors.

FTX was launched by Bankman-Fried, 30, in 2019 and rapidly became one of the most prominent players in the industry with a valuation of $32 billion. He agreed to step down as chief executive last week and has been replaced by Ray, a turnaround specialist. The latter investigates events at the business and explores if any assets can be salvaged. After examining financial records, Ray stated that information produced while the company was in the hands of Bankman-Fried could not be taken with «confidence» and «may not be correct as of the date stated». «I have substantial concerns about the information presented in these audited financial statements,» he said.

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  1. Anonymous18 November 2022 at 12:27

    It's unbelievable that in 2022 we are still getting reports of such dealing, with requests for funds submitted on online chats and such! Such scammers and shady people should be taken down and given prison sentences according to their crimes. Or we will see this happening again and again. Ray can't do wonders here, he will save whatever he can.

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