Completely FTX'ed

FTX CEO John Ray III has more harsh words for Sam Bankman-Fried

FTX was way less sophisticated than Enron, Ray told Congress on Tuesday
FTX CEO John Ray III has more harsh words for Sam Bankman-Fried
Photo: Michael M. Santiago (Getty Images)
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Sam Bankman-Fried, the co-founder and former CEO of the cryptocurrency exchange known as FTX, was scheduled to testify before the US House of Representatives on Tuesday, Dec. 13. He didn’t make the appointment.

That’s because authorities arrested Bankman-Fried on Tuesday in the Bahamas. He now faces 12 separate federal charges brought by three different federal agencies, all related to the corporate implosion of FTX.

Despite his predecessor’s absence, new FTX CEO John Ray III did appear before the House financial services committee. And he didn’t hold back.

Ray did not contribute to the mismanagement of customer funds that led to a liquidity crisis and bankruptcy at FTX. Rather, he was tapped to lead the company through its bankruptcy proceedings. Ray, who oversaw the Enron bankruptcy liquidation—an effort to return as much money as possible to investors, lenders, and customers—has not parsed words about Bankman-Fried in the past.

“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,” Ray wrote in a court filing (pdf) on Nov. 17. Given that Ray oversaw the Enron bankruptcy, his words were striking.

Ray isn’t finished liquidating FTX’s assets. And he apparently isn’t finished excoriating Bankman-Fried either.

Enron was much more sophisticated than FTX 

FTX and Enron are two very different companies, Ray noted. Enron used accounting loopholes and various corporate entities to hide billions of dollars in debt. The company filed for bankruptcy in 2001, and has become synonymous with corporate fraud in the two decades since. Ray said that FTX, meanwhile, was far less sophisticated in its alleged financial crimes.

“Enron was a very different company,” he said in response to one lawmaker’s question. “Crimes that were committed there were highly orchestrated financial machinations by highly sophisticated people to keep transactions off balance sheets.”

Regarding FTX, he said: “This is just taking money from customers and using it for your own purposes.”

Ray also blasted Bankman-Fried’s lack of accounting measures (“literally there’s no record keeping whatsoever”) and the company’s use of Intuit’s personal accounting software Quickbooks (“I have nothing against QuickBooks, but it’s not for a multi-billion dollar company”).

Bankman-Fried’s attorney, Mark Cohen, did not respond to a request for comment about Ray’s allegations of embezzlement.