The new CEO of the now-bankrupt cryptocurrency exchange FTX testified Tuesday before a House committee about the lack of financial oversight and controls he found upon taking over the company a month ago.
John Ray III called the FTX collapse one of the worst financial failures he has ever seen, an “undocumented bankruptcy” fueled by an “unprecedented lack of documentation.”
Notably absent from the hearing before the House Financial Services Commission was FTX founder and former CEO Sam Bankman-Fried, arrested in the Bahamas hours before his expected appearance. The US government, which requested the arrest, announced charges against Bankman-Fried, including wire fraud and money laundering.
FTX filed for bankruptcy on November 11, when he ran out of funds after the cryptocurrency equivalent of a run on a bank. The collapse of the world’s second-largest crypto market drew worldwide attention and raised fears that the fallout could spread to the entire sector. It is estimated that FTX clients would lose billions of dollars.
Ray, who took over FTX on November 11, said FTX’s problems stemmed from months, even years, of poor decisions and weak financial controls.
“This didn’t happen overnight or in the span of a week,” he said.
Ray, a longtime corporate restructuring expert, said the situation at FTX was worse than what he found at Enron two decades ago. Enron was one of the biggest corporate frauds in the country’s history.