FTX Has Been Pure Hell
John J Ray III has earned $690K for two months as CEO of FTX. This might be a dream for the average person, but he swears this has been his worst nightmare.
The new CEO of FTX, John Ray III, recently appeared before the United States Bankruptcy Court for the District of Delaware to share his actions as the CEO of the now-defunct crypto exchange. In his testimony, he revealed the difficulties he faced after taking on the role of CEO.
According to Ray, he has been through chaotic experiences unlike any he has encountered in his previous positions, including the bankruptcy proceedings of Enron and other major corporations. On his first day as interim CEO, he had to deal with the theft of $650 million from FTX’s wallets through unauthorized transfers.
“From my first day on the job, I experienced chaos. One of the fund-tracking specialists described the wallets in this AWS system as sort of needles in a haystack of needles. Those first 48 hours of work were pure hell”
Ray also pointed out that the liquidators at the firm are not experienced enough in crypto assets to fix the problems within FTX. This lack of expertise led to the liquidation of about 4 Wrapped Bitcoin, worth approximately $90,450, due to the liquidators not understanding how lending works on DeFi protocols such as Aave.
The analysts at the crypto firm Arkhan explained what happened in a few words:
On the wallet 0x712, liquidators attempted to remove assets from a borrow position on the DeFi protocol @aaveaave.
Rather than paying back the debt to close out the position, the liquidators opted to remove all extra collateral, putting the position in danger of liquidation. pic.twitter.com/rcpkBQ5bYo
— Arkham (@ArkhamIntel) January 12, 2023
The lack of corporate controls at FTX also made it difficult to trace the company’s money, as insiders could freely transfer the company’s assets without accountability. Ray emphasized that one of the founders could easily take $500 million without detection. “Literally, one of the founders could come into this environment, download half a billion dollars out of wallets on a thumb drive and walk off with them. And there’ll be no accounting for that whatsoever,” he said.
John Ray asked the judge in charge of the case not to interfere with the investigation he had been conducting for the past four months, as the appointment of a new independent examiner would compromise all of his work.
FTX’s lawyer, James Bromley, argued that the presence of a new independent examiner would jeopardize the security of everything that has gone forward and everything that will go forward.
To date, Judge John Doresey has yet to comment on his decision on the appointment of an independent examiner. However, the majority of states have expressed support for the appointment.
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I’m a journalist who specializes in investigative reporting and writing. I have written for the New York Times and other publications.