Amid the arrest and hearing of Bankman’s case, information that Sam had used Slack and QuickBooks for invoices made rounds. According to FTX’s new CEO, John Ray III, the company uses QuickBooks, consumer-level tax software, to manage its accounts and Slack for employees to invoice and track spending. “Nothing wrong with QuickBooks. An excellent instrument, “added Ray. It’s not for a billion-dollar business.
It’s the kind of criticism that clarifies what Ray claimed to be the underlying issue at FTX. In prepared testimony, Ray blamed “a tiny group of highly incompetent and naive individuals”—FTX founder Sam Bankman-Fried and his close friends—for the exchange’s demise.
FTX had almost no internal control systems and no separateness whatsoever, according to Ray’s testimony today, to monitor its leverage or connections to trading firm Alameda Research. The new leadership team was able to put over $1 billion in assets in “cold wallets, in a secure location,” but Ray predicts it will take weeks or months to find the remaining funds.
The disgraced Bankman-Fried, who succeeded him, was supposed to testify after Ray at the hearing in Washington, D.C. Still, he was detained in the Bahamas last night at the request of American officials, who are already preparing to deport him and is expected to serve jail time. Bank man-Fried faces eight criminal allegations from American prosecutors, including conspiracy to commit financial fraud and wire fraud.
A brief look back at what happened
A week after it was revealed that Alameda had billions of dollars worth of illiquid FTX Token (FTT) on its balance sheet, FTX declared bankruptcy on November 11. The news shook consumer trust in FTX, and consumers hurried to withdraw their money from the exchange. Eventually, the ensuing liquidity crunch forced FTX to halt withdrawals.
Bankman-Fried attempted to reach agreements to salvage FTX with Justin Sun, the founder of Tron, and Binance CEO Changpeng Zhao (commonly known as “CZ” for short). Following Bankman-resignation, Fried’s more than 130 FTX Group-owned companies filed for Chapter 11 bankruptcy.
Sam’s latest testimony was intended to be Bankman-first Fried’s public appearance in Washington, D.C., since his empire abruptly collapsed last month. This empire included the cryptocurrency exchange FTX and the quantitative trading business Alameda Research. He accepted the offer to appear before the House committee recently but declined to do so on Wednesday before the Senate Banking Committee.
Additionally, McHenry repeated complaints from the sector about the US SEC’s unclear regulatory structure.