The New FTX CEO Is Blasting Unravelling Bro Sam Bankman-Fried As ‘A Complete Failure’ Of Leadership

The swift demise of FTX is quickly shaping up to be one of the biggest business unravellings in history. Literal billions of dollars remain missing, FTX has abruptly declared bankruptcy, its corporate leadership is essentially on the run and the crypto market at large is on edge as the ripple effect of one of its biggest companies evaporating echoes throughout other firms.

At the center of all this is FTX founder Sam Bankman-Fried, who has very publicly tried to post through all of this despite it becoming increasingly clear that something very, very bad (and possibly extremely illegal) happened to make FTX fail so quickly. As various agencies continue to investigate FTX, what’s left of the company has to undergo bankruptcy proceedings. And that started in earnest on Thursday when a new CEO — John J. Ray III — took over to essentially try overhauling the company so it can continue to function.

Essentially, Ray III is an expert at taking over “distressed” companies in bankruptcy and salvaging what he can from the mistakes of others. In four decades of this work, he’s taken over a lot of big name failed entities, with energy behemoth Enron atop that list. So it probably tells you everything you need to know about FTX that on Thursday in legal filings Ray III said he’s never seen a company in worse shape than FTX.

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). I have supervised situations involving novel financial structures (Enron and Residential Capital) and cross-border asset recovery and maximization (Nortel and Overseas Shipholding). 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. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.

The emphasis is ours here, but it’s a remarkable statement about the horrorshow that was FTX’s books. The numbers coming out of the legal proceedings are truly remarkable. For example, the amount of cryptocurrency the company holds at “fair value” is so small you’d be worried about accidentally overdrafting your checking account.

Business Insider reported Thursday that number was not $659, but $659,000. Which is still a far cry from the $5.5 billion SBF claimed at one point the company actually had. And despite all that, Bankman-Fried keeps talking to the media and plans to raise $8 billion in an attempt to make things right with the customers who lost it all when FTX went belly up. In a way, you have to admire Bankman-Fried for trying. But if I’m an investor, there’s no way I’m reading the above and trusting him with more of my money, digital or otherwise.

[via @kadhim on Twitter]