FTX CEO John Ray has raised concerns about the credibility of documents relating to the embattled cryptocurrency exchange FTX. In a hearing held on Tuesday by the U.S. House Financial Services Committee, Ray raised attention to many irregular business activities of FTX that also included a dubious loan.
“There were no corporate controls, no corporate oversight, no independent board,” Ray said. “The owners, business, and senior management had virtual control of all the accounts and could move money or assets as desired, undetected by customers.”
Following the collapse of FTX, John Ray became the CEO of the beleaguered cryptocurrency exchange and was charged with steering it through bankruptcy. Four weeks into his appointment, Ray appeared as the only witness before the committee for the hearing that lasted for about four hours.
FTX founder Sam Bankman-Fried was also supposed to testify virtually to the committee about the circumstances that led to FTX’s collapse, but his arrest by the Bahamas Royal Police prevented him from doing so.
Ray confirmed the funds were deposited directly into Alameda Research, not FTX.
He explained that Alameda Research and the FTX Group operated as a single entity. Therefore, it is difficult to distinguish the brain behind their operations and how they operate.
Ray testified that Alameda’s operations relied solely on funds from FTX customers and that the firm invested in struggling cryptocurrency firms using funds belonging to non-U.S. citizens using FTX.
Ray’s testimony didn’t establish clear premises on the exact funds belonging to customers that FTX mismanaged, but he deduced that the mismanaged funds account for more than $7 billion. He believes that there will be a long road to recovery of the lost funds from FTX.
“At the end of the day, we are not going to be able to recover all the losses here,” the CEO said. “There was money spent that we will never get back.”
However, to give some hope, the CEO ensured the recovery of more than $1 billion in digital assets. In addition, Ray established that the new management of FTX has secured cash in the bank account of the crypto exchange.
Moreover, he noted the firm is working to locate all of FTX’s funds and that some could be held in offline digital wallets known as “cold storage.”
“It’s possible that assets have escaped the system and exist in a thumb drive that we just don’t have knowledge or possession of,” Ray said
According to John Ray, FTX’s poor bookkeeping makes it harder to track missing funds.
As a result of the recent hearing of FTX CEO John Ray, some truths were revealed, and some predictions were confirmed. It also demonstrated the need for more transparency from centralized exchanges.
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Source: Cryptocurrency - investing.com
