John Ray III, the lawyer who represented plaintiffs after the collapse of Enron and is now overseeing the bankruptcy proceedings of defunct cryptocurrency exchange FTX, revealed that the company led by Sam Bankman-Fried is the worst failure he has seen in his career.
The seasoned attorney, who was appointed chief executive of FTX to manage the company’s restructuring, remarked in a court filing with the United States Bankruptcy Court for the District of Delaware that the team overseeing the company was utterly inept, noting that a substantial portion of the company’s assets are missing or stolen.
“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,” he wrote. “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”
FTX filed for bankruptcy last week after users discovered that firms controlled by Bankman-Fried and his associates were allegedly fraudulently intertwined, causing a liquidity crisis as users rushed to withdraw funds. The fallout has provoked calls for greater regulations on the cryptocurrency sector and will be the subject of a bipartisan hearinghosted by the House Financial Services Committee next month.