A recent filing reveals that FTX used corporate assets to purchase staff properties, adding further drama to the debate surrounding the demise of one of the largest cryptocurrency exchange platforms.
FTX’s business assets were used to buy mansions in the Bahamas among other personal items, according to a recent bankruptcy filing, which was first reported by CNBC. The information becomes available less than a week after the now-infamous cryptocurrency exchange declared bankruptcy, a move that founder and former CEO Sam Bankman-Fried expressed regret for.
John J. Ray III, the new CEO of FTX and a veteran of the Enron wind-down, stated in the filing that he had never “seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”
“From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” Ray said in the filing.
The report claims that homes and other personal assets were bought for workers and advisors using corporate monies from the FTX group. There does not appear to be paperwork for some of these transactions as loans, Ray continued, adding that “certain real estate” was recorded in the names of workers and advisors.
The newly appointed CEO makes it plain that he’s not condemning all FTX employees for the possible mismanagement of funds although it’s unclear if the real estate transactions are to blame.
“Although the investigation has only begun and must run its course, it is my view based on the information obtained to date, that many of the employees of the FTX Group, including some of its senior executives, were not aware of the shortfalls or potential commingling digital assets.”
He continues by saying that some of the individuals most harmed by FTX are current and former employees, and that “these are many of the same people whose work will be necessary to ensure the maximization of value for all stakeholders going forward.”
The demise of FTX started last week when Binance withdrew from a contract to buy the cryptocurrency exchange as a consequence of a due diligence procedure. The company eventually filed for bankruptcy following news claims that FTX was squandering finances and was being investigated.
FTX’s financial records revealed a “back door” in the records that had been made with “bespoke software,” according to Reuters. It was explained as a method by which Bankman-Fried may change the company’s financial records without setting off any alarms. Meanwhile, Bankman-Fried claims that he is still trying to get a $8 billion lifeline for the company.