Sam Bankman-Fried, the founder of the FTX exchange and Alameda Research, a cryptocurrency trading platform, seemed to confuse his bank and his companies.
According to John Ray, the new CEO responsible for restructuring his empire that went bankrupt on Nov. 11, Bankman-Fried received a $1 billion personal loan from Alameda.
He’s not alone: The company, which is a cryptocurrency hedge fund of sorts, has also loaned $543 million in personal loans to Nishad Singh, a Bankman-Friend associate, and $55 million to Ryan Salame, the co-CEO of FTX Digital Markets, one of the subsidiaries of FTX.
These loans are on the white sheet of Alameda that was given to Ray by the Bankman-Fried teams when the latter took over as CEO on Nov. 11. .
In a 30-page document filed with the United States Bankruptcy Court for the District of Delaware. the new CEO painted an unprecedented situation of the former trading empire. According to Ray, the Bankman-Fried empire is in chaos: absence of controls, no meeting of the board of directors, documents non-existent in some cases, employees using company funds to buy houses in their names, management communicating through messages for auto delete app, software to hide misuse of customer money etc. It is a list of everything not to do in a company.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial information as here,” Ray wrote. “From compromised system integrity and deficient regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, inexperienced and potentially compromised individuals, this situation is unprecedented.”
The new Chief Executive Officer has also claimed that there was software at FTX that allowed management to hide the misuse of clients’ funds.
“Unacceptable management practices include using an unsecured group email account as the root user to access confidential private keys and critical sensitive data for the FTX Group companies around the world,” the seasoned restructuring veteran said in a 30-page document filed in the United States Bankruptcy Court for the District of Delaware.
He continued by saying that there was “the use of software to hide the misuse of client funds”.
Ray gave no further details. But his statement thus undermines Backman-Fried’s denials that there was a back door that allowed him to change the data without third parties, including accountants and investors, noticing.
Reuters reported last week that FTX’s financials showed there was a “back door” in the books created with “custom software”. It was described as a way for Bankman-Fried to cook the books without generating any warning.