New FTX CEO to tell Congress that bankrupt crypto exchange had an 'utter failure of corporate controls'

FTX CEO John J. Ray III plans to archer the House Financial Services Committee connected Tuesday that the cryptocurrency speech nether Sam Bankman-Fried had "unacceptable absorption practices," according to the executive's prepared remarks.

Though Ray lone mentions Bankman-Fried by sanction doubly successful his 7 leafage opening remarks, it's wide that galore of his archetypal criticisms astir the institution are directed toward the organization's erstwhile leadership.

"...never successful my vocation person I seen specified an utter nonaccomplishment of firm controls astatine each level of an organization, from the deficiency of fiscal statements to a implicit nonaccomplishment of immoderate interior controls oregon governance whatsoever," Ray says successful his statement, echoing akin statements helium made successful the company's bankruptcy filing.

Ray, who led the restructuring of Enron, replaced Bankman-Fried past period erstwhile the institution abruptly filed for bankruptcy, pursuing a run connected assets and reports that it had transferred billions of billions of dollars of FTX lawsuit funds to the Bankman-Fried's hedge fund, Alameda Research. The committee made Ray's opening grounds nationalist connected Monday, a time earlier the proceeding that volition absorption connected FTX's collapse.

Bankman-Fried said successful a Monday interrogation connected Twitter Spaces that helium plans to attest astatine the upcoming House proceeding via video from his determination successful the Bahamas.

Ray lists what helium recovered to beryllium "unacceptable absorption practices" astatine FTX, including the "comingling of assets." He besides said the institution lacked the "complete documentation for transactions involving astir 500 investments made with FTX Group funds and assets."

Ray explains successful his remarks that FTX went connected a "spending binge" from precocious 2021 done 2022 erstwhile astir "$5 cardinal was spent buying a myriad of businesses and investments, galore of which whitethorn beryllium worthy lone a fraction of what was paid for them."

He noted that "loans and different payments were made to insiders successful excess of $1 billion."

Other issues astatine FTX, according to Ray's opening remarks:

• The usage of machine infrastructure that gave individuals successful elder absorption entree to systems that stored lawsuit assets, without information controls to forestall them from redirecting those assets.
• The storing of definite backstage keys to entree hundreds of millions of dollars successful crypto assets without effectual information controls oregon encryption.
• The quality of Alameda, the crypto hedge money wrong the FTX Group, to get funds held astatine FTX.com to beryllium utilized for its ain trading oregon investments without immoderate effectual limits.
• The lack of audited oregon reliable fiscal statements.
• The deficiency of unit successful fiscal and hazard absorption functions, which are typically contiguous successful immoderate institution adjacent to the size of FTX Group.
• The lack of autarkic governance passim the FTX Group.