Bahamian crypto exchange FTX’s debtors brought a report on Sunday, April 9, highlighting the collapse of a once-leading crypto firm. The 39-page report submitted to the United States Bankruptcy Court for the District of Delaware called out “hubris, incompetence, and greed” that resulted in the fall of FTX.
According to the report, the arrogance and “greed” of top executives within the company, including co-founder and former chief executive officer (CEO) Sam Bankman-Fried, former engineering director Nishad Singh and former chief technology officer (CTO) Gary Wang, created the problem which escalated as the crypto exchange’s demise.
Though the company further noted that it had this “public image” of creating a responsible business, it was actually under the control of a relatively smaller group. This group of individuals had hardly any interest in deploying a “control framework” or setting up an “appropriate oversight” on the business.
In addition, the report stated that these people “stifled dissent, commingled and misused corporate and customer funds.” This group was said to lie about their business and internally mocked their “tendency to lose track of millions of dollars in assets.” Such activities led the company to meet the fate it eventually witnessed in November last year.
The report called out the instance of carelessness that during the filing of the company’s Chapter 11 Bankruptcy, FTX did not have a list of its employees.
The first FTX debtors report noted the previous management of FTX Group failed to control several crucial areas. It included “management and governance, finance and accounting, digital asset management, information security and cybersecurity.”
To prepare its report, the debtors went through thousands of gigabytes of “electronic data and communications,” reviewed over a million documents, and interviewed 19 FTX Group employees. They employed multiple teams from different domains, including legal, restructuring forensic accounting, computer engineering, cryptography, blockchain, and cybersecurity, etc.
On the release of the first report, the chief executive officer and chief restructuring officer of FTX, John Ray III, said that it came in the “spirit of transparency”, which was promised when starting the bankruptcy process.
Ray added that this was provided with the details on findings of the investigation that went over the FTX Group and found that it failed to deploy control measures to keep the cash and crypto assets under safeguard.
“FTX Group was tightly controlled by a small group of individuals who falsely claimed to manage FTX Group responsibly, but in fact showed little interest in instituting oversight or implementing an appropriate control framework. We are continuing our efforts to review the events that factored into the fall of FTX and to identify and recover as much value as possible for creditors.”
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing
Source: https://www.thecoinrepublic.com/2023/04/10/ftx-groups-failed-controls-led-crypto-exchanges-failure-report/