The latest bankruptcy filing shows damning evidence against FTX’s malfunction. Recent developments indicate that Sam Bankman-Fried transferred assets to the Bahamas after declaring bankruptcy. The former FTX CEO is still set to speak at an upcoming event.
As FTX attorneys prepare for bankruptcy hearinga court filing reveals damning tax and governance practices that swept through the entire FTX Group before it filed for bankruptcy last week.
Bahamian Regulators vs. US Regulators
Recent developments indicate that FTX has filed an emergency lawsuit. The presentation indica that Bahamian regulators asked now-former FTX CEO Sam Bankman-Fried to to transfer the assets belonging to the company to the government of the Bahamas.
The motion, which was filed in the United States Bankruptcy Court in Delaware, now indicates that there could be significant concern surrounding the regulatory body within the Bahamas.
Management “Auto-delete” de Sam Bankman-Fried
The company’s decision-making records left a lot to be desired. Sam Bankman-Fried chose communication tools configured to remove the messages after a certain period and encouraged employees to use said tools.
In addition, most of the FTX Group companies did not hold regular board meetings and management had little knowledge of where corporate cash was deposited. The Group also did not maintain accurate records of the company’s bank accounts., nor did it evaluate the credit history of the banking partners. Customer deposits were not visibly recorded as assets on the company’s balance sheet.
Alameda Research, a hedge fund and quant trading firm that was part of the FTX Group, lent $1 billion to Sam Bankman-Fried, $543 million to FTX Head of Engineering Nishad Singh and $55 million to FTX Digital Markets Co-CEO Ryan Salame.
The court filing also reveals deficiencies in the Group’s labor practices, as it had not adequately defined the roles of employees and contractors. This lack of employee data has made it difficult to identify existing employees.
Some employees benefited from corporate funds used to purchase real estate, and subsequent records show that the property was registered in the name of the employee. There is no evidence to suggest that these disbursements were loans for employees.
When employees submitted expense reimbursement requests, managers responded with emojiswhich reveals the lack of a corporate policy on disbursements.
SBF unlikely to join political heavyweights
The eventorganized at the Lincoln Center in New York City, also will welcome New York City Mayor Eric AdamsBlackRock CEO Larry Fink, former Israeli Prime Minister Benjamin Netanyahu, US Treasury Secretary Janet Yellen and Meta CEO Mark Zuckerberg.
The presenter of CNBC Squawk Box and Times writerAndrew Ross Sorkin, will interview all the speakers on one stage.
Historically, DealBook Summit has sought to combine business topics, culture and politics. She has hosted previous speakers including Apple CEO Tim Cook, former US Vice President Al Gore, anti-crypto Senator Elizabeth Warren and the CEO of JPMorgan Chase, who attacks BitcoinJamie Dimon.
New York Times accused of bias, aiding SBF
The crypto community, including famous influencer BitBoy, has denounced the inclusion of SBF in the event. They have accused the former CEO and the Times of trying to repair his public image.
Other Article from the New York Times describing the interview of a psychiatrist who served as an in-house career coach for FTX employees has been accused of damage control by downplaying troubling aspects of SBF and FTX’s corporate culture.
In the article, the psychiatrist denies the rumors that FTX employees used a prescription drug to enhance job performance and that employees engaged in non-monogamous relationships.
This despite the fact that another NYT writer, David Yaffe-Bellamy, commented on crypto-themed condoms of the company when visiting the company headquarters in May 2022.
Sam Bankman-Fried implicated in corporate governance chaos
In an official FTX Twitter thread on November 17, 2022, FTX’s new CEO, John Ray, revealed that SBF had given up FTX, Alameda Research and all of their subsidiaries. Therefore, it does not play any role in the future of these companies.
In addition, Ray said that he had never seen a worse failure in corporate governance.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial information as happened here,” Ray said on November 17, 2022.
In addition, the lawyers FTX bankruptcy accused the former CEO of trying to disrupt the transfer of a competing bankruptcy case from New York to Delaware.
In a court filing, the lawyers suggested that SBF supported the Bahamian authorities, who filed a case in New York over the insolvency of FTX Digital Markets in the Bahamas earlier this week.
The authorities believe that assets held in FTX custodial portfolios are due to FTX Digital Markets. They want to put the assets under the control of the Bahamas. FTX lawyers say this move could hinder the progress of the company’s Chapter 11 proceedings. It also prevents the consolidation of insolvency issues in a single court.
They allege than recent SBF tweets, in which suggested he could turn back the clock in their decision to file for bankruptcy if “we can win a jurisdictional battle against Delaware”, they are sabotaging the bankruptcy process.
Vox Media first released the tweets.
Management “Auto-delete” de Sam Bankman-Fried
Even while the lawyers of FTX prepare for bankruptcy hearing, A court filing reveals damning tax and governance practices that swept across the FTX Group before it filed for bankruptcy last week.
The company’s decision-making records left a lot to be desired. Sam Bankman-Fried chose communication tools configured to automatically delete messages after a certain period and encouraged employees to use such tools.
Furthermore, most companies in the Grupo FTX did not hold regular board meetings and management had little knowledge of where corporate cash was deposited.
The Group also did not maintain accurate records of the company’s bank accounts, nor did it evaluate the credit histories of the banking partners. Customer deposits were not visibly recorded as assets on the company’s balance sheet.
Alameda Research, a hedge fund and quant trading firm that was part of the FTX Group, lent $1 billion to Sam Bankman-Fried, $543 million to FTX chief engineering officer Nishad Singh, and $55 million to the co-CEO of FTX Digital Markets, Ryan Salame.
The court filing also reveals deficiencies in the Group’s labor practices, as it had not adequately defined the roles of employees and contractors. This lack of employee data has made it difficult to identify existing employees.
Some employees benefited from corporate funds used to purchase real estate, and subsequent records show that the property was registered in the employee’s name. There is no evidence to suggest that these disbursements were employee loans.
When Employees Submitted Expense Reimbursement Requests, Managers Responded With Emojiswhich reveals the lack of a corporate policy on disbursements.
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