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HomeCrypto NewsMarketFTX Saga Updates: Court Filing, Vox Interview, Bahamas Seizure, And More

FTX Saga Updates: Court Filing, Vox Interview, Bahamas Seizure, And More

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As the FTX debacle unravels, more shocking facts come to light.



For the past two weeks, the entire crypto industry and, I dare say, the whole finance world has been left stunned by the collapse of Sam Bankman-Fried’s crypto empire.

The story becomes more shocking as we get more insight into the once-leading crypto exchange’s inner workings and day-to-day happenings. Notably, in the last 48 hours, there have been at least four significant updates; 

  • Bankruptcy specialist John Ray who took over as CEO, has submitted a court filing with shocking discoveries
  • SBF gave a controversial interview to Vox over Twitter DMs
  • The Bahamian regulators ordered FTX Digital to send its holdings to government wallets
  • Reuters reports FTX’s strategy to buy licenses to expand its business quickly and gain a competitive edge.

Court Filings Reveal Shocking Details

FTX appears to have had no form of formal accounting or record-keeping system, per the findings of Ray included in a recent court filing. In fact, per the filing, staff carried out communications over an application set to erase messages routinely.

Remarkably, the company had no centralized cash management system either. Consequently, Ray says it is difficult to estimate how much cash the exchange has.

In addition, the filing reveals questionable loans to related parties. Of particular interest are loans to SBF amounting to $1 billion from Alameda Research, another to FTX director of Engineering amounting to $543 million, and $55 to the FTX Bahamas subsidiary co-CEO Ryan Salome. Meanwhile, Paper Bird Inc., a company controlled by SBF, also received a $2.3 billion loan.

Per the filing, employees and executives also used corporate funds to purchase private property in the Bahamas. Several of these transactions are not marked as loans, as the 30-page document indicates.

Furthermore, the company kept poor employee records. The present restructuring executive remains unable to contact certain employees to date leading to speculation that they may be ghost workers.

“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 wrote in the 30-page filing. 

The administrator described the situation as “unprecedented,” citing poor regulatory oversight and inexperienced and potentially corrupt executives.

SBF Takes A U-Turn On Regulations In Controversial Interview

In the filing, Ray has distanced the FTX Group from SBF, noting that he no longer speaks for the group of companies. It comes after the former CEO gave a controversial interview to Vox over Twitter DMs.

In the exchange with Vox journalist Kelsey Piper, the crypto founder takes a U-Turn on crypto regulations.

“f**k regulators,” he said. “they make everything worse.” 

SBF’s statements may surprise some, as the former FTX boss always called for regulations. However, he now describes all of that as “just PR.”

Notably, SBF asserts that he regrets filing for chapter 11 bankruptcy. He believes it would have been better to wait and solicit capital to fill the $8 billion hole in the company’s balance sheet. He asserts that customers would have been made whole in a month.

There is no indication that this would have been the case, as a previous Reuters report disclosed that he was making no headway. Meanwhile, paid FTX spokesperson Kevin O’Leary who said he was close to securing the required capital, asserts that interested parties withdrew as word of regulatory investigations spread.

O’Leary recently caused a stir by asserting he would be willing to invest in SBF again.

The former FTX chief now says his goal is to raise the $8 billion in capital to make customers whole in the next two weeks. But, even if SBF succeeds, it would require creditors’ negotiations and court approval.

Bahamas Securities Regulator Seize FTX Digital Assets

Amidst all this drama, the Bahamas Securities Commission released today that it has assumed control of FTX Digital Markets’ assets. It is the Bahamian subsidiary of the entity.

Notably, it says it assumed control of these assets on November 12, raising questions about when the transaction occurred. 

“Urgent interim regulatory action was necessary to protect the interests of clients and creditors of FDM,” the regulator wrote in its statement. 

It is worth noting that FTX.com and FTX.US experienced a hack that drained over $600 million in crypto assets from reserves. 

The court filings discussed earlier accused SBF of granting the Bahamas regulators “unauthorized access.” It poses quite a problem as the entity headquartered in the Bahamas filed for chapter 15 bankruptcy protection in New York on Wednesday.

Bahamas liquidators are requesting US courts to hand over control to the Bahamas, a CoinDesk report indicates.

In further developments, Reuters now reports that FTX employed a strategy to buy licenses to gain a competitive edge. Notably, instead of applying for permits and following due process, which could take years, the company bought into licensed entities to immediately gain regulatory covering.

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Ammara
Ammarahttps://thecryptobasic.com/
Ammara Mubin is a cryptocurrency reporter and trader with vast experience in the industry. Mubin has written several news stories related to the crypto industry, including non-fungible tokens (NFTs), decentralized finance (DeFi), fundraising, mining, etc. Her major focus is covering regulatory events that are capable of shaping the entire crypto ecosystem.

Disclaimer: The content is for informational purposes only, may include the author's personal opinion, and does not necessarily reflect the opinion of TheCryptoBasic. All Financial investments, including crypto, carry significant risk, so always do your complete research before investing. Never invest money you cannot afford to lose; the author or the publication does not hold any responsibility for your financial loss or gains.

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