January 29, 2023

FTX’s new CEO answered questions about his efforts to recover client funds from the collapsed cryptocurrency exchange during a lengthy hearing for lawmakers on Tuesday, saying his team had an “unprecedented” experience at the company. Missing record issue.

John J. Ray III, an attorney who specializes in corporate restructuring, testified for about four hours, saying he was in the early stages of sorting out exchanges to find funds that could be used to repay creditors and consumers.

“It will take time to find these assets,” Mr Ray said. “As I said, this process will take months, not weeks. But we will try to do it in the fastest possible way.”

He described FTX as a company that keeps few records of its business, including tracking invoices in messaging app Slack and using consumer tax software QuickBooks, unusual for a multibillion-dollar company. He also said that while his team saved the company’s Slack, it was also aware of the company’s use of “disappearing messaging.”

Asked whether customers would get their money back, Mr Ray demurred.

“It’s too early to tell what the ultimate recovery will be for each particular customer. At some point we’ll obviously know that and we obviously want to maximize that,” he said.

“Well, it doesn’t sound like you really think they’re going to get their money back,” said Rep. Alma Adams, D-North Carolina.

Mr. Ray was asked to quantify FTX’s epic collapse and compare it to Enron’s. Mr Ray oversaw the dissolution of the energy trading company following an accounting scandal in 2001.

He said their cases were very different, and called the perpetrators of the Enron crime “very sophisticated,” while FTX executives seemed “really just old-fashioned embezzlement” and not at all sophisticated.

Still, Mr. Wray’s response suggests he believes FTX’s former CEO, Sam Bankman-Fried, was well aware of the company’s fraudulent practices. At one point, he was asked whether it was possible that Mr. Bankman-Fried was unaware of the commingling of funds between FTX entities, as he has said before, including in an interview with The New York Times.

“No,” Mr. Ray replied.

On Tuesday, prosecutors charged Mr. Bankman-Fried with defrauding investors. He also faces civil securities fraud charges.

Lawmakers have called for new regulations for the crypto industry. Rep. Jake Auchincloss, D-Mass., said his “patience with the cryptocurrency bulls is wearing thin.”

“Fourteen years on, the American public has heard a lot of promises, but also seen a lot of Ponzi schemes,” he said. “For cryptocurrencies, it’s time to suffer or shut up.”

When lawmakers spoke directly about Mr. Bankman-Fried, he courted politicians of both parties before FTX collapsed, and they were critical of it.

Rep. Brad Sherman, D-Calif., and a longtime crypto critic, reminded his colleagues of the bigger picture. “Don’t criticize Sam Bankman-Fried and then pass his bill,” Mr. Sherman said, referring to Mr. Bankman-Fried’s extensive lobbying in Washington and his efforts to push for crypto legislation that would apply to FTX.

When asked what role Mr. Bankman-Fried would play in the company going forward, Mr. Ray was concise.

“The role he’s playing so far: zero,” he said.



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