- Bankruptcy filings show the fair value of crypto held by FTX is $659,000.
- That compares to Sam Bankman-Fried claim FTX held about $5.5 billion in "less liquid" crypto tokens.
- "Never in my career have I seen such a complete failure of corporate controls," new FTX CEO John Ray III said.
The FTX chapter 11 bankruptcy filing is shedding new light on just how bad the internal controls at the crypto exchange were up until it imploded in spectacular fashion last week.
A particularly jarring disclosure is that the total fair value of crypto held by FTX International was just $659,000 as of the end of September, compared to claims from its founder Sam Bankman-Fried's that the company held $5.5 billion in "less liquid" crypto tokens.
"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," new FTX CEO John Ray III, who is overseeing the liquidation of the company, said.
That's quite the statement coming from Ray, given that he oversaw the liquidation of Enron following its more than $60 billion bankruptcy in 2001.
Clues were building that the internal numbers were going to be awful, given that FTX founder Sam Bankman-Fried caveated multiple tweet storms about the finances of FTX as "approximate" and "to the best of my knowledge" and "treat all of these numbers as rough."
All-in, FTX's assets as of September 30 total about $2.2 billion, according to the bankruptcy filing, though its unclear how different those numbers might be today given the recent run on the exchange and high-profile hacks that occurred last week.
Another example of how unprecedented the situation is includes the fact that Alameda Research, the crypto hedge fund run by Bankman-Fried that used customer deposits from FTX to plug its money-losing hole, gave Bankman-Fried a loan of $1 billion prior to it going bankrupt.
"From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented," Ray said.