By Hannah Lang
WASHINGTON (Reuters) – Shortly after U.S. regulators on Tuesday accused FTX founder Sam Bankman-Fried of defrauding investors, the company’s new chief executive told the court that the cryptocurrency platform’s implosion reflected inadequate management and inexperienced individuals in charge.
“The collapse of the FTX group appears to result from the absolute concentration of control in the hands of a small group of grossly inexperienced and unsophisticated individuals,” said John Ray, who was appointed after Bankman-Fried stepped down and the company filed for insolvency in November 11th.
Ray also said there is virtually no distinction between the operations of FTX and Alameda Research, Bankman-Fried’s cryptocurrency trading firm, which had close ties to his exchange.
“I’ve never seen a total lack of record keeping – absolutely no internal controls,” Ray told the US House of Representatives Financial Services Committee.
He said in the deposition that he hired a new CFO, a head of human resources and administration, and a head of information technology. He also appointed a board of directors, chaired by former attorney Joseph Farnan.
Since taking over as chief executive, Ray said he has established that FTX client assets have been blended with those of Alameda Research. Clients’ funds were used to trade on margin, which exposed clients to massive losses, he said.
Ray also addressed why FTX US was included in the bankruptcy filing. Bankman-Fried has expressed confusion about this in media interviews, claiming that the company’s US entity was financially sound. But he said such a move was necessary to avoid a “run on the bank” and allow FTX’s new leadership to identify and protect its assets.
Bankman-Fried was due to appear before the committee on Tuesday and his testimony was highly anticipated.
“Unfortunately, the timing of his arrest denies the public the opportunity to get the answers they deserve,” said panel chair, Democratic Representative Maxine Waters.
“Be assured that this committee will not stop until we uncover the full truth behind the FTX collapse.”
(Reporting by Hannah Lang, Doina Chiacu and Moira Warburton)
#Bad #management #inexperienced #leaders #led #collapse #FTX #president #ISTOÉ #DINHEIRO