Latest FTX: New CEO says controls were 'a complete failure'

Latest FTX: New CEO says controls were ‘a complete failure’

According to new CEO John J. Ray III, the company’s complete failure of corporate controls is “unprecedented.”

Advisors overseeing FTX Group’s bankruptcy have struggled to locate the company’s cash and cryptocurrency, citing poor internal controls and record-keeping.

According to new CEO John J. Ray III, who had more than 40 years of restructuring work, including overseeing the liquidation of Enron, called the company’s complete failure of corporate controls “unprecedented.”

The comments came in a filing asking a federal judge to transfer a competing bankruptcy case brought by Bahamas liquidators in New York to the state. US lawyers have also told the bankrupt platform that Sam Bankman Fried is undermining efforts to reorganize his crumbling empire with “relentless, disturbing tweets” that appear aimed at moving assets away from the control of a US court in favor of a US court in the Bahamas. .

In an article published Wednesday by Vox Media, a reporter posted screenshots of Twitter direct messages in which Bankman-Fried blasted regulators and called FTX’s bankruptcy decision a mistake.

More retail money is trapped as crypto companies stumble. Crypto lender BlockFi, which has halted customer withdrawals, is reportedly preparing to file for bankruptcy. Gemini Trust Co. , the crypto platform run by the Winklevoss brothers, includes withdrawals in its lending program. Binance CEO Changpeng Zhao told CNBC that his company “will be interested in looking at assets and buying assets, especially some of the better ones” that might be sold in the event of bankruptcy.

FTX Advisors Find Fragment of Company Crypto (8:20 AM NY)

Ray said in a sworn declaration filed in bankruptcy court Thursday that FTX “did not maintain central control of its funds” and failed to maintain an accurate list of bank accounts and account signatories, or pay sufficient attention to the creditworthiness of banking partners.

“Debtors have located and secured only a fraction of the digital assets of FTX Group that they hope to recover in these Chapter 11 cases.”

Binance Suspends Deposits of USDC (SOL), USDT (SOL) Token (7:57AM NY)

Binance has temporarily suspended USDC (SOL) and USDT (SOL) deposits “until further notice,” the company announced on its blog.

Binance Evidence of FTX Crash Unacceptable, UK Lawmakers Say (6:27 AM NY)

Binance has sent news articles — rather than internal records — to a UK parliamentary committee investigating the collapse of and its planned sale of the FTT token, a move some UK lawmakers have called disappointing and unacceptable.

Alison Thewlis, a member of the UK Treasury Committee, said in an interview on Bloomberg Radio that Binance had sent news articles to the committee, while expecting to receive internal records about the potential market consequences of Binance’s announced withdrawal from FTT. Thewliss said that Binance’s lack of transparency will affect the committee’s recommendations to the government on regulating the digital currency industry.

Gopax says some payments are delayed due to Genesis Global (5:35pm HK)

South Korean cryptocurrency exchange Gopax has notified its users of payment delays in a deposit product linked to Genesis Global Capital, according to a statement on its website published late Wednesday. The product called “GOFi” is offered by Genesis, Gopax’s second largest shareholder and major business partner

Binance Prepares to Bid on Voyager Digital, CoinDesk Says (4:10PM HK)

Binance.US is preparing to bid for bankrupt crypto lender Voyager Digital, CoinDesk reports, citing a person familiar with the matter.

Voyager was trying to sign a deal to sell itself to a bidder who lost in an auction won by FTX. The $1.4 billion sale to FTX collapsed after the former went bankrupt.

Voyager filed for bankruptcy protection in July after a failed attempt by FTX subsidiary Alameda Research to bail it out with a revolving credit line.

FTX Wipeout Is New Test Of Nerves For Asia Regulators (4:00 PM Hong Kong Time)

Crypto’s latest existential crisis erupted amid far-reaching planned changes to the digital asset rule books in Asian hubs including Hong Kong and Singapore. Officials in both jurisdictions and abroad face calls to ensure greater transparency, particularly with regard to clients’ assets.

Hong Kong took a more welcoming stance two weeks ago, detailing plans to become a cryptocurrency hub with legal retail trading and dedicated exchange-traded funds. By contrast, Singapore is clamping down on retail cryptocurrency trading, focusing instead on productive applications of blockchain technology.

Both seem to stick to their divergent organizational paths.

Bukele in El Salvador vows to buy Bitcoin every day (1:30 PM HK time)

“We buy one #bitcoin every day starting tomorrow,” President Najib Bukele tweeted, without elaborating.

The 2,381 bitcoins in the country have suffered a significant drop in value amid the recent sell-off of the cryptocurrency. However, the country’s finance minister said in an interview last week that the government had not sold any of its bitcoins and therefore did not realize any loss. Tron founder Justin Sun said he will join Bukele in buying 1 bitcoin per day.

Bankman-Fried tells his side of the FTX crash story in tweets (1:10pm HKT)

On Wednesday, Bankman-Fried added 18 more tweets to a tortuous streak he began at the start of the week.

The posts, published intermittently, combined an apology for his failures with his view of what went wrong in the companies he founded and ran. They add to an earlier series of cryptic posts. “We have become overconfident and neglectful,” he said.

Temasek cuts $275 million in investment (8:50 a.m. HKT)

The Singapore state-owned investor said in a statement that his belief in Sam Bankman Fried was likely “misplaced” after he invested $210 million in FTX International and $65 million in FTX US via two funding rounds. It added that it has no direct exposure to the remaining cryptocurrency.

Temasek said it conducted an “extensive due diligence process” on FTX and that its audited financial statement showed the company to be profitable. She added that while the downgrade does not have a significant impact on its overall performance, “we take any investment losses very seriously and there will be lessons for us from this.”

Winklevoss Faithful Has a $700 Million Problem in Gemini (8:00 AM HKST)

Clients of cryptocurrency exchange Gemini, founded by brothers Cameron and Tyler Winklevoss, are caught up in the FTX fallout because of a high-yield product called Gemini Earn — which just listed Genesis Global as one approved borrower that passed its vetting process. Gemini halted recalls of the product on Wednesday after Genesis suspended recalls.

That left in limbo a program that, according to a person familiar with the matter, has $700 million in client funds tied to it. It remains to be seen if Gemini Earn customers ever get their money back. And a lot depends on Genesis itself, which has hired consultants to explore all possible options, including raising new funding.

Silbert’s Crypto Empire Shows Cracks (7:05 AM HKT)

Pending withdrawals at cryptocurrency brokerage Genesis have cast an unwelcome spotlight on Barry Silbert, the man at the helm of the Digital Currency Group empire.

Last year, DCG’s valuation reached $10 billion, after it sold $700 million of shares in a SoftBank-led private sale. In addition to Genesis, it has over 200 companies in its portfolio including Grayscale Investments, which offers the world’s largest crypto fund. DCG is also the parent company of crypto mining service provider Foundry Digital, Coindesk and Exchange Luno.

BlockFi said to plan bankruptcy (3:34 p.m.)

BlockFi Inc. is preparing Cryptocurrency lenders to file for bankruptcy within days, according to people familiar with the matter who asked not to be named because the discussions are private.

The cryptocurrency lender has paused customer withdrawals, citing bankruptcy uncertainties with FTX, while saying it had sufficient liquidity and was exploring options with outside advisors.

Congress to Investigate FTX Crash (3:18 p.m.)

FTX and its former CEO, Bankman-Fried, a Democratic mega-donor, will face conflicts in Congress next month as House and Senate committees investigate the company’s collapse.

The House and Senate Financial Services Committees are planning hearings in December that will look at the sudden demise of FTX and its impact on the broader digital asset industry. Democrats and Republicans alike have expressed outrage at the current state of the cryptocurrency market.

SBF Wrong About FTX Leverage Levels (2:25 PM)

Bankman-Fried says he was wrong about the cryptocurrency exchange’s leverage levels, thinking it was about $5 billion when it was $13 billion.

In his recent series of tweets explaining how FTX imploded, Bankman-Fried said the company had become “overly trusty and careless.”

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