FTX's first interim report since bankruptcy reveals massive failures in management, finance and security

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FTX's first interim report since bankruptcy reveals massive failures in management, finance and security Cryptocurrencies

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The difficulty of their work was exacerbated by the fact that they assumed control “amidst a massive cyberattack, itself a product of the FTX Group’s lack of controls, that drained approximately $432 million worth of assets on the date of the bankruptcy petition […] and threatened far larger losses absent measures the Debtors immediately implemented to secure the computing environment.”

They have also interviewed 19 employees of the FTX Group “who worked in Policy and Regulatory Strategy, Information Technology, Controllers, Administration, Legal, Compliance, and Data Science and Engineering, among others,” and they gathered “substantial information through counsel” from five others. These interviews did not include Nishad Singh, Gary Wang, or Caroline Ellison, who have pleaded guilty to charges and are cooperating with the U.S.

They also shared a new story of conscientious concerns regarding Alameda’s actions being met with retaliation after a newly-hired lawyer discovered the hedge fund was using a North Dimension bank account to send money to FTX customers. The lawyer “was summarily terminated after expressing concerns about Alameda’s lack of corporate controls, capable leadership, and risk management.”

According to the report, accountancy at Alameda was even worse. “Alameda often had difficulty understanding what its positions were, let alone hedging or accounting for them,” they wrote. “For the vast majority of assets, Alameda’s recordkeeping was so poor that it is difficult to determine how positions were marked.” They cited a ‘Porfolio summary’ from June 2022 asking Alameda personnel to “come up with some numbers? idk.

 

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