Normally, when the president of a $30 billion company suddenly resigns after just 18 months, it counts as a red flag.
Brett Harrison left FTX.US after months of arguing with Sam Bankman-Fried and Nishad Singh about the lack of internal controls, formal management structure and hiring processes at the company.
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"After raising these issues directly with them, his bonus was drastically reduced and senior internal counsel instructed him to apologize to Bankman-Fried for raising the concerns, which he refused to do," read the first debtor report from the company's bankruptcy's proceedings.
As Sam Bankman-Fried and his lawyers prepare for his October trial on fraud charges, details about the collapse of his $32 billion FTX empire are coming out through the bankruptcy proceedings.
The report lays out in detail how FTX was just a billion dollar house of cards with paragraphs like "normally, in a bankruptcy involving a business of the size and complexity of the FTX Group, particularly a business that handles customer and investor funds, there are readily identifiable records, data sources, and processes that can be used to identify and safeguard assets of the estate. Not so with the FTX Group."
Lack of controls also led to the suspicious cyberattack that drained $432 million from the company's balance sheet on the day it declared bankruptcy.
The reports points its fingers directly at SBF, FTX co-founder Gary Wang and senior executive Nishad Singh, saying that their combination of "hubris, incompetence, and greed" led to the demise of the company.
"These individuals stifled dissent, commingled and misused corporate and customer funds, lied to third parties about their business, joked internally about their tendency to lose track of millions of dollars in assets, and thereby caused the FTX Group to collapse as swiftly as it had grown," the report states.
"In this regard, while the FTX Group’s failure is novel in the unprecedented scale of harm it caused in a nascent industry, many of its root causes are familiar: hubris, incompetence, and greed."
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