John Ray, the CEO of FTX exchange, has filed a report with the Delaware bankruptcy court, outlining the flaws in the management of the exchange that led to its collapse.
The debt restructuring team of the company has found that FTX lacked proper financial and accounting controls, which was one of the main reasons for the downfall of the exchange.
According to John Ray, the previous FTX leadership relied on a “mess” of various tools such as Google Docs, Slack messaging, shared drive information, and Excel spreadsheets to run the multibillion-dollar empire.
However, FTX used QuickBooks bookkeeping software, which according to Ray, is not suitable for an international company that works with the money of people from different continents.
Analysts have concluded that FTX neglected bookkeeping, with approximately 80,000 transactions left unprocessed in QuickBooks.
Moreover, Ray has emphasized that FTX was run by three inexperienced people who had recently graduated from college.
FTX co-founders Sam Bankman-Fried and Gary Wang, along with former exchange CTO Nishad Singh, oversaw nearly every critical aspect of the FTX Group despite their meager risk management experience.
In addition, FTX did not submit financial statements on time at the end of the reporting period, and the company did not conduct internal error checks.
The document notes that FTX did not provide a complete list of its employees at the time of filing for bankruptcy in November 2022.
The former head of the American division of the FTX exchange, Brett Harrison, expressed his concerns about the misallocation of powers and inefficient financial management to Bankman-Fried and Singh.
However, Harrison’s remuneration was significantly reduced, and the company’s legal counsel advised Harrison to apologize to Bankman-Fried for his doubts.
Harrison refused to apologize and resigned due to disagreements with management.
It’s worth noting that in March, FTX Europe, the Cypriot division of FTX, launched a new service, allowing European clients of the exchange to withdraw their balance in fiat currencies from the platform.
However, the damage had already been done, and FTX had to file for bankruptcy due to the mismanagement of the company.