By Nathan Vardi November 18, 2022

10 crazy takeaways from FTX’s bankruptcy filing

Now that Sam Bankman-Fried’s crypto empire has collapsed, John Ray, III, the new CEO of FTX, assessed the company’s demise in U.S. bankruptcy court.

— Ray in bankruptcy-court

“”

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. This situation is unprecedented.

Terrain Map

Here are 10 takeaways Ray made in federal bankruptcy court about Bankman-Fried’s FTX fiasco:

1. Most of FTX’s digital assets have not been secured.

As of Thursday, Ray said he’d “located and secured only a fraction of the digital assets” he hoped to recover.

2. The biggest customer creditors are a mystery.

Ray said he couldn’t make a list of FTX’s top 50 creditors including customers.

3. Alameda Research loaned $4.1 billion out to entities, including Bankman-Fried and his closest partners.

Ray revealed that Alameda had made $4.1 billion of related-party loans that remained outstanding at the end of September.

4. Corporate funds were used to buy personal homes.

Ray’s filing said that there is no documentation for the transactions and loans associated with these real estate purchases, which were recorded in the personal name of employees and advisors.

5. Personalized emojis were used to approve disbursements.

FTX employees  “submitted payment requests through an on-line ‘chat’ platform where a disparate group of supervisors approved disbursements by responding with personalized emojis.”

6. Alameda Research was one of the world’s biggest hedge funds.

According to the bankruptcy filing, Alameda’s balance sheet showed $13.46 billion in total assets as of the end of September.

7. Bankman-Fried secured audit opinions from the metaverse.

Audit opinions for the international FTX trading platform part of the company came from Prager Metis, which describes itself as the “first-ever CPA firm to officially open its Metaverse headquarters in the metaverse platform Decentraland.”

8. Alameda had a secret exemption on FTX.com.

Ray’s filing indicated that the hedge fund might have had a trading edge on the FTX.com trading platform.

9. Customer liabilities are not reflected in financial statements.

Though Ray expected “significant liabilities” to arise, none of these liabilities were reflected in the financial statements that were prepared while Bankman-Fried ran FTX.

10. Ray has no confidence in any FTX balance sheet.

Many of the balance sheets at FTX and Alameda are unaudited, and because they were produced while Bankman-Fried ran the company, Ray is skeptical of their integrity.

Keep reading on MarketWatch.

Photos by:  iStock/Getty Images Story by:  Nathan Vardi Google Web Story by:  Amelia Langas

More Visual Stories

Amazon, Twitter, Meta among companies announcing layoffs

Thanksgiving dinner will cost you 20% more than last year