A fixer assigned to work through the disaster that Sam Bankman-Fried left behind at his failed FTX crypto company says the crisis is because people in the company lacked experience – and were unsophisticated.
Bankman-Fried, was arrested this week in the Bahamas and is facing a list of eight charges including money laundering and fraud.
The Daily Mail reported the arrest of Bankman-Fried foiled plans for members of Congress to grill him on the situation.
John J. Ray III, who earlier led Enron through its own massive collapse, has been assigned to work through the new FTX crisis.
Ray said this week the problem came about because of the “‘inexperienced and unsophisticated” influences in the company that it imploded.
The company collapsed recently – following a $5 billion “spending binge” in the last year, and Ray said the demise could be blamed on the “absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals.”
There was, for one thing, he said, “Literally no record keeping whatsoever.”
Workers exchange critical company information, including invoices, by a chat app, and used Quickbooks accounting software, which while it is a “nice tool,” according to Ray, it’s not for a multibillion-dollar company.
Bankman-Fried is facing a move to have him extradited to the U.S. to face eight counts of criminal activity.
Ray confirmed that more than $1 billion in digital assets already have been found, but the company owes a total of about $10 billion.
Ray, appearing before Congress, said the “misuse of funds” was the simple explanation to the company’s woes. And he said the company had virtually no systems or controls that companies usually use to handle client funds.
A New York Post report said Bankman-Fried also used tens of millions of dollars to make illegal political donations to those in Washington.
Prosecutors claimed his reason was to influence the direction of policies and laws regarding cryptocurrency.
The criminal indictment from the U.S. attorney for the Southern District of New York accused him of having “devised” a scheme to “defraud” customers.
“The charges included wire fraud on both lenders and customers, as well as conspiracy to commit wire fraud on both groups. He was also accused of conspiracy to commit both commodities and securities fraud as well as conspiracy to commit money laundering. He faces a maximum 115-year sentence if convicted,” the report said.
He was arrested late Monday in his retreat in the Bahamas.
via wnd
