FTX had 'absolutely no internal controls,' lack of record keeping, new CEO tells Congress

Ray said his team has been able to "secure over $1 billion in assets" so far.

Published: December 13, 2022 10:40am

Updated: December 13, 2022 1:46pm

John J. Ray III, the new chief executive officer of the FTX Group, told a House committee on Tuesday that there were "absolutely no internal controls" and a lack of record keeping at the company. 

Ray, the former chief executive of Enron during its bankruptcy process, was asked to elaborate on his previous comment that he's never seen such a failure of corporate control before the FTX case.

"The issue here I was speaking to is I've never seen an utter lack of record keeping, absolutely no internal controls whatsoever," Ray said during a House Financial Services Committee hearing on Tuesday.

Ray was also asked to compare the FTX collapse to other bankruptcies he has managed in the past.

"It's one of the worst from a documentation standpoint. Even in the most failed companies you have a fair roadmap of what happened. We're dealing with literally, sort of a paperless bankruptcy, in terms of how they created the company," he told the committee. "It makes it very difficult to trace and track assets particularly, as I've said, in the crypto world. It's really unprecedented in terms of the lack of documentation."

Ray said the collapse of FTX was happening months prior to the public news of the company's demise in early November. 

Ray revealed that his team has been able to "secure over $1 billion in assets" so far.

He said securing all assets is an "ongoing process" that will take "weeks, perhaps months."

A committee member asked Ray why he doesn't think the audited financial statements of FTX are reliable. 

"We've lost $8 billion of customer money so by definition I don't trust a single piece of paper in this organization," he said.

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