FTX Exchange, following the collapse of its business, has filed its first day declaration in bankruptcy court citing a “complete failure of corporate controls,” per a court filing.
John J. Ray III, the newly appointed CEO of FTX Exchange, addressed the many issues facing FTX Exchange and the lack of leadership exhibited by Sam Bankman-Fried and other executives previously in charge of the company.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” said Ray. “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 also explained that he has over 40 years of experience in restructuring companies, such as what is needed for FTX. His words cut a bit deeper when one realizes someone with that level of experience has never witnessed “failure” at this level.
The declaration spells out five core objectives that the new leadership team has in order to get things moving in the right direction: implementation of controls, asset protection and recovery, transparency and investigation, efficiency and coordination, and maximization of value.
Additionally, Ray expressed his concerns for currently available audited financial statements. Prager Metis, the audit firm for said documentation, is listed as the “first-ever CPA firm to officially open its Metaverse headquarters in the metaverse platform Decentraland.”
The new CEO of FTX explained that he did not know anything about this auditing firm and stated “As a practical matter, I do not believe it appropriate for stakeholders or the Court to rely on the audited financial statements as a reliable indication of the financial circumstances of these Silos.”
Furthermore, Ray expressed the improper use of FTX funds “to purchase homes and other personal items for employees and advisors.”