In the words of Ray III, “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.”
John Ray III, the newly appointed CEO of FTX, criticized Sam Bankman’s management practices in his court filing. He stated that the FTX Group under Sam did not conduct security audits or maintain appropriate records for the digital assets under the platform’s ownership. He further added that FTX's lack of proper regulation has led to an "unprecedented situation."
According to Ray III, FTX’s employees and advisors used the group’s corporate funds to purchase homes and other personal items. The court filing disclosed that Sam received a personal loan amounting to $1B from Alameda Research. Similarly, Nishad Singh, Director of Engineering at FTX, received a $543M loan from Alameda.
"The FTX Group did not maintain centralized control of its cash. Cash management procedural failures included the absence of an accurate list of bank accounts and account signatories."
Furthermore, Alameda Research, a firm largely controlled by Sam Bankman, was exempted from the exchange’s auto-liquidation protocol. The court filing also disclosed that there was an absence of independent governance between Alameda and its third-party investors.
As per the data compiled by Ray III, the liabilities of FTX and its subsidiaries amounted to $6.36B. He noted that a large portion of the assets owned by the FTX Group was either "missing or stolen." This has led the crypto community to speculate that FTX’s actual liabilities may exceed $50B.
