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Employees of crypto exchange FTX would submit expense claims via chat messages, and random managers would approve the claims by responding with emojis, the company’s new CEO said in court filings.
New CEO John Ray said FTX employees submitted payment requests to a “disparate group of supervisors,” who would approve the expenses “by responding with personalized emojis,” FTX’s Thursday bankruptcy filing shows.
“The debtors didn’t have the type of disbursement controls that I think are appropriate for a business enterprise,” Ray said.
Ray, a lawyer who also oversaw the bankruptcy of energy giant Enron, was tapped to lead the restructuring of FTX. The exchange filed for bankruptcy on November 11.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial information as occurred here,” Ray said.
He blamed FTX executives and former chief executive Sam Bankman-Fried, saying they also failed to keep records of their communications when making decisions, among a raft of other allegations of mismanagement.
“One of the most pervasive failures of the FTX.com business in particular is the absence of permanent records of decision-making,” Ray said, according to the filing. “Mr Bankman-Fried frequently communicated using applications that were set to automatically delete after a short period of time.”
He added that Bankman-Fried will encourage employees to use the same chat software.
Ray said FTX “never had board meetings” and that the exchange used employees’ personal names to buy real estate in the Bahamas with company funds.
He also said FTX didn’t keep proper records of who it hired. “Repeated efforts to locate some of the alleged employees to confirm their status have been unsuccessful to date,” he said, implying that some of those workers may never have existed.
Wray was particularly critical of Bankman-Fried, saying the exchange’s co-founder “continues to make erratic and misleading public statements.” He pointed to a Vox report that Bankman-Fried allegedly sent a DM to reporter Kelsey Piper saying “fuck the regulators” and that they’re “making everything worse.”
Bankman-Fried resigned on November 11, the same day FTX filed for bankruptcy. His trading company, Alameda Research, and about 130 affiliated companies have filed for bankruptcy.
Prior to FTX’s implosion, rival crypto exchange Binance was set to acquire the company. But it backed down, citing findings during the due diligence process and concerns of federal investigations into FTX.
FTX and Bankman-Fried did not immediately respond to Insider’s requests for comment.
