John Ray accuses Sam Bankman-Freed of incompetence

John Ray, who became the new CEO of FTX, recently appeared in court, where he strongly criticized the miscalculations of the previous administration of the American exchange. He also criticized ex-CEO Sam Bankman-Freed's general management style and sees nothing surprising in FTX's bankruptcy.

Yesterday, a court was held in Delaware, which considered the FTX bankruptcy procedure and the initiation of asset valuation processes. According to John Ray, who became the new CEO of the American crypto exchange, he was looking for investors' assets in order to secure them. The labor was divided between John Ray, specialists from Alvarez & Marsal, ChainAnalisys, Kroll, Sullivan & Cromwell and Nardello & Co. In addition, a confidential cybersecurity firm was involved in the search for crypto assets.

The assembled team, consisting of the above persons, was engaged in collecting the necessary information, searching for crypto assets and protecting the funds of investors who invested in FTX, but the matter was complicated by other factors. Among the latter were numerous requests from regulators, as well as the deciphering of accounting records and further preparation of documentation needed to be submitted to the court.

John Ray said that the case with the bankruptcy of FTX is not the first in his career. Previously, he was involved in the restructuring of Enron, Residential Capital, Overseas and Nortel, and most of the situations in which he was involved were indeed complicated by defects in internal control:

I have over 40 years of legal and restructuring experience. I've been the principal on several of the largest corporate bankruptcies: Enron, Residential Capital, Nortel, and Overseas. Nearly every situation I've been involved in has been characterized by flaws in internal controls, compliance, human resources, and systems integrity.

Ray said that despite the impressive experience, which is more than 40 years, such as he saw in the case with FTX, he could not see in any case in which he was involved:

Never in my career have I seen such a complete failure of corporate control and such a complete lack of reliable financial information as happened here.

He stated that the entire blame for the bankruptcy of FTX lies with the former head of the American crypto exchange, Sam Bankman-Fried. In addition, according to John Ray, his team included a small circle of people who did not have experience, competence and were compromised. In addition, the company's accounting, auditing, cash management, cybersecurity, human resource management, data protection risks and other systems to support business were not properly controlled.

It is precisely because of this incompetent management of funds and the company as a whole that John Ray, along with his team, is in an extremely difficult position during the process of searching for lost funds-cryptoassets. He suggests that it will no longer be possible to find most of the funds, since the assets of the American crypto exchange were lost or stolen. So Ray asked the court for a proper public inquiry.

Prior to all of this and his resignation, Sam Bankman-Fried said that the worst decision of his life was to file for bankruptcy. According to his assumptions, the FTX problems were resolved somewhere by 70%.