Ray’s Stark Review of FTX’s Bankruptcy Mess
On November 17, John Ray, the freshly appointed chief executive of FTX Group, opened the court file with a no‑frills, “complete failure” audit of the collapsed crypto giant. He compared the chaos to the worst of his 40‑year career—including that infamous Enron debacle—and claimed nothing in the past had eroded corporate controls or trustworthy financial info so thoroughly.
What Went Wrong?
- FTX borrowed US$10 billion from its customers to bail out Alameda Research, the hedge fund whose risky bets blown up.
- When the value of FTT—FTX’s internal token—plummeted, a surge of withdrawals crashed the company into insolvency.
- Alameda’s side: an entity loaned US$2.3 billion to FTX, while the founders and top execs borrowed US$1.6 billion from the same entity.
- Personal perks: FTX funds paid for houses, cars, and other goodies for employees and advisors—often sandwiched into payroll without proper loan documentation.
- “Ghost” payments: staff tendered requests via an online chat, with supervisors approving them through personalized emojis—a soft‑glide on solid internal controls.
- Communication crumbles: the chief used auto‑delete apps and encouraged the crew to do the same, leaving little trace of his decisions.
Financial Statements Gone Wild
Most audited books were incredibly spotty. Ray flagged serious doubts about the ones that were, because they relied on Prager Metis, an accounting firm that popped out of the Metaverse platform Decentraland. Even the so‑called “audit” has nothing to do with standard accounting practices.
Misleading Talk and a Bit of Rewind
In a Twitter exchange, the former CEO was caught making erratic and misleading statements. A Vox interview the week before intended to show remorse turned into an attempt at back‑tracking, with Bankman‑Fried claiming he was merely “venting.”
Who’s Left to Dig?
FTX’s roster: about a million U.S. users plus dozens of thousands overseas. How many recover their digital dough now that the bankruptcy proceedings are in motion remains to be seen.
Bottom line: Ray’s opening report paints a stark picture of a leadership team that practically forgot the safe‑guards that should tether any financial enterprise. The full fallout is still unfolding, but the headlines are clear: FTX was a case study in how not to write bookkeeping rules.
‘Misplaced’
FTX’s Shockwave: Investors and Regulators Catch Their Breath
Temasek Holdings, the Singapore state investor that got its hands on FTX, didn’t hold back. When the platform announced a US$275 million write‑down, Temasek’s spokesperson slammed Sam Bankman‑Fried, saying the deal was a clear indicator of a “misplaced belief” in the founder’s decision‑making.
Who’s on the Cut‑Off List
- SoftBank Vision Fund – wrote down its stake to zero.
- Sequoia Capital – followed suit and wiped the investment entirely.
- Other global players are feeling the tremors as the FTX collapse ripples outward.
Crypto’s Red‑Jack and the Market’s Yellow‑Bee
Genesis Global Capital, a major crypto lender, froze all customer redemptions. The company blamed the extreme market dislocation and the loss of confidence sparked by FTX’s implosion. In other words, they’re saying, “We can’t let you pull your money out right now because the whole industry is in a frenzy.”
Regulators Jump Into the Ring
Policymakers worldwide got into action by Thursday, drafting emergency responses to FTX’s fiasco. Singapore’s finance minister warned that the collapse raises “very serious allegations that amount to potential fraud.” That’s a mouthful that basically says, “We’re not sure this all happened under legal pretences.”
In Indonesia, crypto exchanges were instructed to halt all FTX token trading. Meanwhile, in Brazil, crypto advocates leveraged the FTX disaster to push lawmakers for a bill that would tighten oversight of the sector.
What’s Next for Customers
With FTX now in bankruptcy or liquidation, the next phase involves figuring out how customers can reclaim or settle their claims. Stay tuned for updates as the legal and financial machinery gears up to sort out the mess.
Sorry for the drama, FTX community — it’s all part of the whirlwind that follows a high‑profile collapse.
