Sam Bankman-Fried, the founder of the FTX exchange and Alameda Research, a cryptocurrency trading platform, seemed confused about his bank and his companies.
According to John Ray, the new CEO who led the restructuring of his empire that went bankrupt on November 11, Bankman-Fried received a $1 billion personal loan from Alameda.
He’s not alone: the firm, which is a type of cryptocurrency hedge fund, has also lent $543 million in a personal loan to Nishad Singh, a Bankman associate, and $55 million to Ryan Salame, the company’s co-CEO . FTX Digital Markets, one of FTX’s affiliates.
These loans appear in the Alameda white paper that the Bankman-Fried staff gave to Ray when the latter took over as CEO on November 11th. This restructuring veteran is supposed to be handling the liquidation of FTX and its cash-strapped affiliates that imploded overnight. .
In a 30-page document filed with the United States Bankruptcy court for the District of Delaware. The new CEO painted the state of the former trader’s empire as unprecedented. According to Ray, the Bankman-Fried empire is in chaos: lack of controls, no meeting of the board of directors, records that do not exist in some cases, employees using company funds to buy houses in their name, management communicating through auto-delete messages. app, software to hide misuse of customer money etc. It is a list of all the things not to do in business.
“I have never seen such a complete failure of corporate controls and lack of reliable financial information as here in my career,” Ray wrote. “From compromised system integrity and flawed regulatory oversight overseas, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented. “
The new CEO also confirmed that FTX had software that allowed management to hide the misuse of customers’ money.
“Unacceptable management practices include using an unsecured group email account as the root user to access secret private keys and critical critical data for FTX Group companies around the world,” blasted the seasoned restructuring veteran in 30 page document filed with the. United States Bankruptcy Court for the District of Delaware.
He went on to say that “software was used to conceal the misuse of customer funds.”
Ray did not provide further details. But his statement therefore undermines Backman-Fried’s denial that there was a back door that allowed him to change the records without third parties, including auditors and investors, noticing.
Reuters reported last week that FTX’s finances revealed a “back door” in the books, created with “ordered software.” It was described as a way Bankman-Fried could cook the books without raising alarms.