As lawyers for the new management of cryptocurrency exchange FTX appeared in bankruptcy court on Tuesday, they painted a grim picture of former CEO Sam Bankman-Fried and his rampant mishandling of the exchange that at one point boasted ads featuring the likes of Tom Brady, Gisele Bundchen, and Larry David. (All three are currently being sued by FTX customers.)
“Your honor, what we have is a worldwide organization that was run effectively as the personal fiefdom of Sam Bankman-Fried,” James Bromley, counsel to FTX’s new management, argued before the court. According to Bromley, the house of cards fell apart the moment the exchange was wrestled from Bankman-Fried’s control.
Via Yahoo! Finance:
The crypto empire of roughly 130-affiliated companies built by 30-year old Sam Bankman-Fried slid from digital asset powerhouse into bankruptcy in a matter of days earlier this month.
In the hearing, FTX’s legal counsel also described the transition when founder and former CEO Sam Bankman-Fried signed over corporate control of FTX at petition date as an “emperor has no clothes moment.”
According to the Wall Street Journal, lawyers for the new management also informed the court that a “substantial amount” of assets are missing and “may have been stolen as a run on customer deposits and a liquidity crunch precipitated a crisis of leadership and led the firm to collapse.” The legal team raised suspicions about just how those assets seemingly vanished.
“FTX was in the control of inexperienced and unsophisticated individuals, and some or all of them were compromised individuals,” Bromley told the judge.
The bankruptcy proceedings are an attempt by FTX’s new management to “secure customer funds” following the crash. However, the exchange is reportedly still “suffering from cyber attacks,” which has sparked an investigation from the Department of Justice.