Once upon a time, the cryptocurrency exchange FTX was a jewel of the web3 world. Now, in the span of a week, its reputation has gone from shooting star to sinking ship. After admitting to mismanaging large amounts of customer money, the exchange’s founder and CEO, Sam Bankman-Fried (also known by his initials “SBF”) ignominiously stepped down last Friday, and the company filed for bankruptcy. Now, as the dust settles and the air clears, the adults in the room are trying to pick up the pieces and figure out just how screwed the company and all its investors are.
A recent bankruptcy filing, revealed Thursday by the exchange’s new CEO, John Ray III, may help with that. While the document provides additional context on what’s been happening with the imploding exchange, it also provides some entertainment because, whoo boy, it is totally insane.
The filing reveals the inner workings (or lack thereof) of the exchange, giving a peek into the bizarre financial practices and decision-making that went on under SBF’s leadership. For a company that was once considered to be the rising star (and potential savior) of the crypto industry, FTX apparently ran itself like a ship of drunken sailors, foregoing common and established record-keeping practices and engaging in a slew of shady and ill-advised behavior.
“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,” wrote Ray in his filing. “This situation is unprecedented.”
That’s truly saying something, given the fact that Ray presided over the restructuring of Enron, after the financial giant famously caved in on itself from corruption in the mid-2000s.
Keep that in mind—and recall that SBF told Vox he regretted filing for bankruptcy—as you peruse the biggest revelations from FTX’s court filing.