John Ray III, the individual in charge of clearing up the mess at the bankrupt cryptocurrency exchange FTX, testified before the U.S. House Committee on Financial Services. Ray has reviewed the company’s records since November 11th as the new CEO and Chief Restructuring Officer.
In his announcement to the U.S. Congress, John Ray stated that he had never in his experience witnessed such a complete failure of corporate controls. This declaration demonstrates the style of management used by Sam Bankman-Fried, Who was chosen to investigate the infamous Enron scandal.
The collapse of FTX appears to stem from absolute concentration of control in the hands of a small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company entrusted with other people’s money or assets, he said.
Millions Of Dollars That Lost
When the exchange collapsed, the new CEO disclosed that more than $7 billion was lost. He made it clear that there was no chance of a complete financial recovery. The restructuring team needed help locating lost money because of the inadequate financial records that the prior management had kept.
In addition, Ray told the lawmakers that FTX spent close to $5 billion between 2021 and 2022 on several acquisitions, real estate deals, and loans to key executives; the restructuring team has already recovered more than $1 billion.
A significant percentage of the monies was used for political donations, which has drawn attention since FTX failed. The question of whether President Joe Biden intended to repay the $5.2 million he received from FTX was put to News Secretary Karine Jean-Pierre during a recent White House press briefing. Karine Jean-Pierre didn’t give a definitive response.
Sam Bankman-Fried was also scheduled to testify in front of Congress. But because of his arrest, he could not face justice in front of the Lawmakers.
Yesterday, Forbes published a copy of his scheduled testimony (December 13th). By including FTX US in the bankruptcy proceedings, the witness accused John Ray and his group of endangering the interests of the country’s clients. The American subsidiary, by the former CEO, is still solvent, and its clients can receive immediate compensation.
Related Reading | FTX CEO Sam Bankman-Fried Arrested By U.S. Government Ahead Of Testimony
A longtime proponent of cryptocurrencies, Congressman Tom Emmer, has requested that SEC Chairman Gary Gensler appear before Congress. Congressman Emmer contends that Gensler is accountable for his agency’s regulatory shortcomings that prevented this terrible incident.