At the first hearing in FTX's bankruptcy proceedings, lawyers confirmed that millions of dollars are stolen or missing — and revealed stunning details about the downfall of the once-mighty exchange.
As FTX collapsed in early November, Samuel Bankman-Fried handed over control the cryptocurrency exchange he founded to John J. Ray III, a corporate turnaround specialist.As FTX collapsed in early November, Samuel Bankman-Fried handed over control the cryptocurrency exchange he founded to John J. Ray III, a corporate turnaround specialist.
Bromley confirmed what many of FTX's millions of customers have feared. He said his team has determined"a substantial amount of assets have either been stolen, or are missing." The company's new CEO, John J. Ray III, has hired a cybersecurity consultancy to track down the funds, according to a court filing.As Ray and his team started to gather information, they immediately recognized glaring problems with FTX's data.Or, as Bromley said about FTX:"The debtors have unreliable books and records."
But the FTX lawyers said that just ten months ago, the company was valued at a whopping $40 billion. NPR has been unable to independently verify that valuation.FTX's legal team outlined how much money the company has gotten from investors since it was founded in 2019, and in its most recent funding round, it raised an additional $400 million for its U.S. business, and $500 million for its larger international operations.
Customers panicked after Binance Co-Founder and CEO Changpeng Zhao, one of FTX founder Sam Bankman-Fried's rivals, suggested he'd lost faith in a cryptocurrency FTX created.FTX couldn't meet the demand for withdrawals, and lawyers said that, in that moment of crisis, it became evident there were serious issues with FTX's management.
Since Ray took over the company's operations on Nov. 11, he and his team have"struggled to get access to customer data due to ongoing security risks," according to Brian Glueckstein, another lawyer representing FTX.
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