FTX Debacle

Not that I have anything to do with any Crypto … but, I’ve always been very much a Doubting Thomas. When I hear things like this, I’m glad I am too poor to have dabbled. :wink: I find it all very interesting. And nothing says integrity and professionalism when it comes to your financial security, quite like signing off with an emoji. :flushed:

Veteran bankruptcy pro John J. Ray III, the newly appointed FTX CEO, said the collapsed crypto exchange was the worst corporate failure he’s ever witnessed. And he oversaw the liquidation of Enron.

Here’s some of what Ray wrote in an absolutely bonkers bankruptcy filing yesterday:

“I have over 40 years of legal and restructuring experience. I have been the Chief Restructuring Officer or Chief Executive Officer in several of the largest corporate failures in history. I have supervised situations involving allegations of criminal activity and malfeasance (Enron).”

“Nearly every situation in which I have been involved has been characterized by defects of some sort in internal controls, regulatory compliance, human resources and systems integrity. 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.” (Emphasis ours.)

Why such a dumpster fire?

How long do you have? Here are just a few examples of the chaos and mismanagement that went on at FTX, as described by Ray.

Lack of spending controls: FTX employees submitted payment requests through a chat platform, which were approved with personalized emojis. Some corporate funds were used to buy homes and personal items for employees and advisors, according to Ray.

Nonexistent records: Speaking of FTX employees, Ray said his team is having a hard time piecing together just who worked at the company because they couldn’t find an official roster. Furthermore, there are no records of major business decisions made by FTX because former CEO Sam Bankman-Fried allegedly made those using auto-deleting messages.

Finally, Ray really wants you to know that SBF has nothing to do with the company anymore. In his tweets and conversations with the press, SBF has continued to make “erratic and misleading public statements,” and he does not speak for the current iteration of FTX, according to Ray.

And… Remember that hack of nearly half a billion dollars last weekend? It was actually a government asset seizure. :thinking:

The Securities Commission of the Bahamas has now acknowledged that it was behind the removal of $477 million in crypto assets from the bankrupt exchange on Nov. 12.

“The Securities Commission of the Bahamas, in the exercise of its powers as regulator acting under the authority of an order made by the Supreme Court of the Bahamas, took the action of directing the transfer of all the digital assets of FTX Digital Markets Ltd. to a digital wallet controlled by the commission, for safekeeping,” the agency said in a statement.

The transfer occurred the day after FTX had filed for Chapter 11 bankruptcy protection in Delaware and immediately sparked concerns of a major hack. The company announced that day that “unauthorized access to certain assets has occurred” and that they were coordinating with law enforcement on the matter.”

On Thursday, the U.S.-based bankruptcy administrators led by John Ray, III, who have taken control of FTX, said in court filings that they had “credible evidence” that officials in the Bahamas had directed FTX founder Sam Bankman-Fried to access FTX’s systems after the Chapter 11 filing, “for the purpose of obtaining digital assets of the debtors.”

The seizure of assets came amid an emerging fight for control over the direction of the bankruptcy proceeding, with officials in the Bahamas filing a separate Chapter 15 bankruptcy petition in federal court in New York on Nov. 15.

That filing was on behalf of FTX Digital Markets Ltd., a subsidiary that managed significant aspects of the company’s operations from its headquarters in the Caribbean island nation.

A Chapter 15 filing is used typically in cases involving companies with debtors in multiple countries.

In its statement, the Bahamian Securities Commission said it believed FTX Digital Markets was not part of the Delaware bankruptcy proceeding.

The administrators of the Delaware bankruptcy have asked the judge in their case to combine the cases, saying that it was duplicative and confusing to keep them separate. The judge scheduled a hearing on the matter for Monday.

The administrators of the Delaware case have accused Bankman-Fried of attempting to undermine their efforts to sort out the mess he left behind by pushing the second bankruptcy case brought by Bahamian officials.’’

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This is pretty funny.

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Without being a multi-millionaire, I could see those things were just a ponzi scheme way back.
Now we just need the bottom to fall out of NFTs as those things are just as dumb, or maybe even dumber.

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I’ve been extremely skeptical of the whole cryptocurrency thing from the moment I heard of them. Blockchain is a great technology with all kinds of security-related uses, but building unregulated currencies on top of it without government regulation and oversight seems like a recipe for wild valuations swings, fraud, recklessness, and disasters.

I heard an interview with Sam Bankman-Fried, the CEO of FTX, on the Sam Harris podcast last winter. The guy was, at the time, worth about $30 billion. He said his entire purpose for making money was to do good in the world with the intention of giving it all away in whatever manner would do the most good for the world. He seemed totally authentic and believable, but after the collapse of the house of cards he built, I have my doubts, as I did at the time.

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“I’ve got a thing I created - no you can’t hold it or see it, it’s on my computer - anyway it’s worth $100 - wait $1,000 - no $20,000 - you better buy some, it looks like a good investment because it’ll be worth millions by Thursday”

ME: “Yeah, no thanks”.

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I work too hard for my money to buy into any sort of snake oil scheme then watch it all fall over only to see someone else buying a house in Nassau for themselves with my pennies. Like anything else, getting rich quick is covered by Newton’s third law of equal and opposite reactions.

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