- John Ray III’s court testimony on FTX has been released to the public today.
- Alameda used FTX’s funds without any effective restriction.
- The testimony provided a detailed summary of the “unacceptable management practice” which led to FTX’s crash.
Shining light on FTX’s misdeeds, the court testimony of the new CEO of FTX John Ray III has been released to the public today. One of the shocking truths among the many wrongdoings is that Alameda, the crypto hedge fund of the FTX group, used FTX’s funds without any restrictions.
Based on the court testimony, the CEO of FTX Debtors claimed that the collapse of FTX Groups arose from the mismanagement of funds by “inexperienced” individuals. This group of individuals failed to implement the effective controls required for an organization handling public funds.
Pinpointing that the investigation is still underway, Ray III provided a detailed summary of the “unacceptable management practice” which led to FTX’s crash. Through research, it was found that FTX’s senior executives had access to systems that store customers’ assets, without any security controls to prevent them from redirecting those assets.
Furthermore, the private keys were not stored with effective security controls or encryption. The lack of audited financial statements, incomplete documentation for transactions, commingling of assets, absence of risk management personnel, and scarcity of independent governance were some of the reasons that led to FTX’s collapse.
Implementing a restructuring plan, the new CEO of FTX Debtors explained that there are five core objectives to help the crypto exchange with its customers and creditors. The five core objectives are the Implementation of controls, asset protection and recovery, transparency and investigation, efficiency and coordination, and maximization of value.
At the end of the testimony, Ray III stated that he is committed to understanding what happened to FTX in order to formulate the correct conclusion to help customers, creditors, investors, counter-parties, employees, and regulators.