A new court filing concerning the bankrupt Sam Bankman-Fried’s companies has revealed a crypto empire that was massively mismanaged and possibly fraudulent – a “complete failure of corporate controls”.
“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,” FTX’s new CEO, John J. Ray III, wrote in a court filing on Thursday.
In the court filing, numerous nefarious findings came out.
The company never had board meetings, and crypto deposited by customers wasn’t recorded on the balance sheet, according to the filing.
Alameda Research (FTX’s hedge fund) gave Bankman-Fried a $1 billion personal loan and also loaned $543 million to the Director of Engineering.
Further, the company didn’t keep proper records of who they employed. Certain employees can’t be located, so some were likely fake, the filing said.
Corporate funds were used to purchase real estate for personal use, and employees and executives put their names on homes purchased with company funds.
Moreover, there were no cash management systems in place at the company and no one knew how much cash was on hand at any given time, or even where it was located, the filing added.
Other procedural flaws include “the lack of an accurate list of bank accounts and account signatories, as well as an insufficient focus on the creditworthiness of banking partners”.
FTX is a company that was valued at $32 billion just a couple of months ago.
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