Exec who cleaned up Enron calls FTX mess 'unprecedented'

[Eugene]

Source: Associated Press

Exec who cleaned up Enron calls FTX mess ‘unprecedented’

By KEN SWEET and MICHELLE CHAPMAN
November 17, 2022

NEW YORK (AP) — The man who had to clean up the mess at Enron says the situation at FTX is even worse, describing what he calls a “complete failure” of corporate control.

The filing by John Ray III, the new CEO of the bankrupt cryptocurrency firm, lays out a damning description of FTX’s operations under its founder Sam Bankman-Fried, from a lack of security controls to business funds being used to buy employees homes and luxuries.

“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,” Ray said. “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”

Ray was appointed CEO on November 11, after the company was near collapse and its previous management sought legal counsel on what to do next. Bankman-Fried was persuaded to give up control of the company by his lawyers as well as his father, Joseph Bankman, a professor at Stanford Law School, according to Thursday’s filing.

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Read more: https://apnews.com/article/ftx-trading-former-ceo-d2c2b881dc0eb0ec37b454674f446b52

[moniss]

1. Many are

already trying to trot out the excuse "no one could have known". Our system is such that people are able to create the appearance of a company and one that might have some undefinable something at some undetermined date and in the meantime use Rube Goldberg legal structuring to allow them to drain millions for themselves and to retain most of it even if there are some minor "penalties" along the way. Remember when all you had to do was incorporate and put .net after the name of the company and in no time at all CNBC would have you on in the morning talking about your "some day service/approach" and, despite having no sales and little else other than debt, by the afternoon your previously barely a $1.00 stock was now skyrocketing and you were rich? CNBC took off also and you have to wonder if a few talking heads made some money too. Then the bubble burst and CNBC and the rest all expressed surprise. Lather,rinse, repeat.