FTX, the troubled crypto firm run, is an “unprecedented situation”, according to its new chief executive.
Until recent days, FTX and its boss Sam Bankman-Fried were among the most prominent and highly-praised parts of the crypto industry. But in the wake of a report that suggested the company could be in a weaker financial position than it revealed, the company and Mr Bankman-Fried have seen their valuation and standing crumble.
In the wake of that collapse, Mr Bankman-Fried declared the company bankrupt, and allowed new chief executive John Ray to take over the firm.
Now Mr Ray has published an official statement – known as first day pleadings – in which he gives an account of the downfall of the company and attempts to rescue it.
In it, he says that he has 40 years of legal and restructuring experience, which has included working on high-profile cases such as the collapse of Enron. But FTX is unlike any other case and may be entirely without precedent, he suggests.
“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,” Mr Ray writes in the document.
“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.”
The document lists a number of failings, including Mr Ray’s claims that the company failed to properly track its accounts or even the employees of the company.
He also says that clearing up what happened at the company is difficult because of its failure to keep proper records. What records there are show that major decisions were discussed in unusual ways, including the use of emoji, he says.
