FTX’s new CEO says he has never seen such a “complete failure” of corporate control
John Ray III, the new CEO of FTX’s cryptocurrency exchange, said the exchange’s complete absence of trustworthy financial information. He added that never in his career had he witnessed such a complete failure of company controls.
In a filing with the US Bankruptcy Court for the District of Delaware, John Ray III, “Never in my career have I witnessed such a complete failure of corporate controls and such complete absence of trustworthy financial information as here … from the integrity of compromised systems and faulty regulatory oversight abroad,” To the concentration of control in the hands of a very small, inexperienced, vulnerable group of individuals, this situation is unprecedented.”
Ray was appointed CEO of FTX within days of the company filing for bankruptcy protection.
FTX, once among the top five crypto exchanges in the world, is facing a liquidity crunch and its CEO Sam Bankman-Fried (aka SBF) has told investors that the company is facing a shortfall of up to $8 billion in withdrawals. He is requesting and needs emergency funding, according to the Wall Street Journal.
FTX CEO Sam Bankman-Fried said on Wednesday that without a cash injection, bankruptcy is likely. On the night of November 7th, in the midst of a liquidity crisis, Bankman-Fried was seeking to raise money from venture capitalists and other investors. FTX was earlier this year valued at $32 billion by private investors.
As FTX CEO Bankman-Fried was reaching out to investors to raise funds, he also went to Binance, which is already a significant investor in FTX. Binance CEO Changpeng Zhao (aka CZ) agreed to the bailout and announced that he had reached a non-binding deal to buy non-US FTX companies for an undisclosed amount.
However, a day after the announcement, the CEO of Binance took a U-turn and said, “The issues are beyond our control or ability to help.” This reversal shook the cryptocurrency market as it signaled uncertainty in the crypto world.
In its statement, Binance said: “As a result of corporate due diligence, as well as the latest news reports regarding mishandled client funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com. Initially, our hope was to be able to support clients FTX to provide liquidity, but the issues are beyond our control or ability to help.”
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