New CEO of FTX Blames Collapse in ‘Grossly Inexperienced Leadership’

• John J. Ray III, FTX’s new CEO, stated that the collapse of the company was due to inexperienced leadership.
• Ray prepared remarks for House Financial Services Committee and will testify on Tuesday.
• Sam Bankman-Fried, the former CEO of the Bahamas, was taken into custody Monday. 

John J. Ray III, FTX’s new CEO, attributed the crypto lending company’s collapse to its former leadership. He said they were “grossly unexperienced and unsophisticated” prepared remarksMonday’s House Financial Services Committee share. 

Ray will speak Tuesday. Ray stated that the collapse of FTX Group appears to have been caused by a concentration of control in the hands a small group of inexperienced and unsophisticated people who failed to implement any of the systems or controls necessary to protect assets or money that has been entrusted to them. 

Ray’s harsh comments were directed at FTX’s former leadership, including Sam Bankman-Fried, the former CEO. He said that he had never seen “such an utter failure in corporate controls at all levels of an organization”, including the absence of financial statements and “complete fail” of internal management. 

Ray, an insolvency expert for over 40 years, was called before the House Financial Services Committee Tuesday morning. He oversaw Enron’s bankruptcy.

Bankman-Fried was also expected to testify Before, you could access the Bahamas remotely he was arrested by Bahamian authorities Monday, based off an indictment accusing him of“Orchestrating a massive, long-running fraud.” 

FTX filed for Chapter 11 bankruptcyAlameda Research was one of 130 affiliated groups that collapsed in November. They are collectively known as “FTX Group”. The collapse exposed mishandling of customer fundsTransfer funds to Alameda Research 

Ray was appointed to manage FTX’s restructuring. rebuked management in the bankruptcy filing “Never in my professional career have I seen such complete failures of corporate controls, such a complete lack of trustworthy financial information, as this.”

He said, “This is a unique situation.”

Ray disclosed in remarks to the House Committee, that the FTXGroup went on a $5 billion spending spree between late 2021 and 2022 to buy a variety of businesses “worth just a fraction of what it was paid for them.” Ray also stated that more than $1 billion was spent on “loans or other payments” to insiders. 

Insider asked FTX for comment regarding Ray’s comments but they did not immediately respond.