Former FTX CEO Sam Bankman-Fried was right about one thing: he and those closest to him will no longer see any money from the company.
FTX made it clear in a lawsuit over the weekend that neither Bankman-Fried nor the three recently fired members of his inner circle (nor their relatives) will see any compensation from the now bankrupt company.
As Bankman-Fried put it on November 10, the day before FTX filed for bankruptcy and stepped down as CEO, healing users comes first. “Then investors – old and new – and employees who have fought for what is right in their careers and who were not responsible for any of the mistakes,” he wrote. on Twitter.
He was still CEO at the time and had not yet announced that the company was going bankrupt.
Since then, FTX has taken steps to distance themselves from Bankman-Fried. Bahamian regulators refused and then confirmed that they ordered employees to transfer hundreds of millions in money unauthorized transactions on the same day, the company filed for Chapter 11 protection on November 11.
Now the company is making it crystal clear that, at least in this, the words of Bankman-Fried will hold true: “No amounts shall be paid under the authority requested by this motion to any of the following persons or any person known among the debtors to have a family relationship with any of Samuel Bankman-Fried, Gary Wang, Nishad Singh or Caroline Ellison,” today’s filing reads.
An FTX spokesperson confirmed that co-founder and chief technology officer Gary Wang, engineering director Nishad Singh and Alameda Research CEO Caroline Ellison were fired on Friday, November 18 in a Wall Street Journal report.
The very sharp exclusion of Bankman-Fried and his inner circle appeared in a movement of FTX to pay employees what they owe for work done before the company filed for bankruptcy and to continue paying fees and benefits during the legal proceedings.
In bankruptcies it is customary for the debtors, in this case FTX, to request permission from the court to continue paying their employees. After all, the company’s assets would have to be frozen. But new FTX CEO John J. Ray III has noted that it has been especially difficult to locate all funds and employees of FTX.
The file in court also showed that even before filing for bankruptcy, the company had $20,000 in billable hours on file with Owl Hill Advisory, the company through which it hired John J. Ray III as its new CEO.
Ray himself charges $1,300 an hour, which the consulting firm will bill to FTX on a monthly basis. The executives he hired from RLKS Executive Solution to help with finance and administration are paid $975 an hour.
FTX also said in the filing that it has suspended its practice of paying certain employees “with their own cryptocurrency token and/or stock options or stock-based compensation.” FTX’s native token is the FTX Token or FTT.
FTX isn’t sure how much money it has or how many people it employs: CEO John J. Ray
The trouble first started for FTX and the quantitative trading desk Alameda Research, its sister company, when a leaked balance sheet showed that Alameda’s $14 billion balance sheet included $5 billion in FTT. That prompted Binance, a former FTX investor, to announce that it would be liquidating its $580 million FTT position. The resulting bank run caused the price of FTT to plummet as users rushed to sell their tokens and withdraw funds from the FTX platform.
After Binance announced its intention to acquire rival crypto exchange FTX, Binance called off the deal a day later. Subsequently, Bankman-Fried said in several lengthy Twitter threads that he had misunderstood the company’s leverage and that he and his team would work to find liquidity, announcing at one point that there was a pending deal with Justin Sun’s TronDAO.
But shortly after that announcement, FTX filed a petition for Chapter 11 bankruptcy protection on Friday, November 11.