John Ray, who took over as CEO of crypto alternate FTX amid chapter proceedings, offered detailed written testimony earlier than showing earlier than the U.S. Home Monetary Companies Committee on Dec. 13.
In testimony made out there on the “FTX Collapse Investigation, Half I” listening to, Ray reiterated most of the allegations made in chapter court docket, saying that the collapse of the collapse was partly because of the “absolute management of management.” It is as a result of the main focus is within the fingers of FTX.” A really small group of very inexperienced and unsophisticated people. Wray, who oversaw the liquidation of power firm Enron within the early 2000s, added that FTX administration “did not implement a lot of the programs and controls” wanted to guard client property.
“In my profession, I’ve by no means seen a complete failure of company controls at any stage of the group, from lack of economic statements to whole failure of inside controls and governance,” Ray stated.
The FTX CEO additionally refuted claims made by his predecessor, Sam Bankman-Fried, who was successfully scheduled to look on the similar listening to. Bankman-Fried stated in quite a few interviews after the alternate’s chapter submitting that FTX US (a derivatives alternate owned by the FTX Group) is solvent and might be able to make its customers excellent underneath sure circumstances. stated to be excessive.
Nonetheless, based on Ray’s writing, “FTX US didn’t function independently of FTX.com,” so a Chapter 11 submitting was essential to keep away from financial institution runs.
“Because the time of submitting, as FTX US’ e book and file issues and the numerous relationships between FTX US and different FTX Group firms have develop into extra clear, we now have develop into extra assured that this was the best resolution. I did.”
FTX’s CEO stated on Nov. 16 that Bankman-Fried “has no ongoing function” within the firm or its subsidiaries and “doesn’t communicate on their behalf.” SBF continues with interviews detailing his function within the occasions main as much as the alternate’s downfall, as a part of its “apology tour”.
The breakdown of occasions main as much as Ray’s chapter submitting included the “mixing” of FTX shopper property with these of Alameda Analysis and the usage of these property by hedge funds in margin buying and selling, exposing purchasers to “huge losses.” It included that From 2021 to 2022 he continued to “spend”, shopping for firms and investing round $5 billion.
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The Home committee listening to was the second to research the FTX chapter, following the Senate Agriculture Committee listening to on Dec. 1, when Commodity Futures Buying and selling Fee Chairman Rostin Behnam stated: I used to be the one witness. The Senate Banking Committee additionally has a listening to scheduled for his Dec. 14, together with Hollywood star Ben McKenzie, investor Kevin O’Leary, regulation professor Hillary Allen, and the Kate Institute’s Heart for Monetary Monetary Companies. Jennifer Schulp, Director of Regulatory Research, shall be in attendance. Another that seems as a witness.