Details of the ongoing bankruptcy cases of FTX have surfaced, revealing details of the crisis in a recent court testimony.
John Ray, the acting chief executive of the now-defunct crypto exchange, testified on Monday at the United States Bankruptcy Court for the District of Delaware. During the hearing, he stated that he and others working at the firm had “carefully” conducted investigations on FTX’s operations.
The latter began to resist a measure to appoint an independent examiner to the company’s bankruptcy case, Ray claimed. He cited “inadvertent errors” that could lead to the loss of “hundreds of millions of dollars of value” for the pushback.
Ray continued that, after taking control of FTX in November last year, he could not find “a single list of anything” linked to the firm’s bank accounts, insurance, and income statements.
The lack of data triggered a “massive scramble for information,” he said.
Amid the company’s Chapter 11 bankruptcy petition, he noted several attempts to steal digital assets, sparking security protocols from experts and liquidators.
He explained: “Your normal first-day petition is chaotic as sometimes can be — this was something that I have never experienced. Those hacks went on virtually all night long […] It was really 48 hours of what I can only describe as pure hell.”
Additionally, he asserted he did not have connections with former FTX executives, including the top three: Alameda Research chief executive Caroline Ellison, ex-CEO Sam Bankman-Fried, and FTX co-founder Gary Wang. He also had no ties to Bankman-Fried’s parents or other affiliates before taking over the firm.
No one “that was in a control position” with the ex-chief executive could direct the exchange’s actions while under new management.
New Examiner under Examination
The news comes after the Office of the US Trustee claimed the case required an independent examiner capable of releasing a public transparency report on the company’s bankruptcy activities.
US Trustee Office representative Juliet Sarkessian urged courts should appoint an examiner for the public’s interest. Despite this, court judges did not rule to select an independent examiner.
Lawyers were instead directed to confirm a “consensual resolution” on the case.
The developments follow ongoing proceedings to resolve FTX’s asset management crisis and unveil events that unfolded prior to and during the company’s collapse. Bankman-Fried currently faces eight counts related to the misappropriation of funds, wire fraud, and defrauding investors, among others.
