FTX’s new CEO worked on Enron’s bankruptcy but he’s still never seen such a ‘complete failure’ and ‘absence of trustworthy financial information’

John Ray III, in a filing with the U.S. bankruptcy court for the district of Delaware, said there was a “complete absence of trustworthy financial information.”

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray said. “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”

Ray noted that many of the companies in the FTX Group, particularly those in Antigua and the Bahamas, didn’t have appropriate corporate governance and many had never held a board meetings. The group also had cash management procedural failures, including the absence of an accurate list of bank accounts and account signatories. There was also insufficient attention paid to the creditworthiness of banking partners.

Ray also addressed the use of corporate funds to pay for homes and other items for employees.

“In the Bahamas, I understand that corporate funds of the FTX Group were used to purchase homes and other personal items for employees and advisors. I understand that there does not appear to be documentation for certain of these transactions as loans, and that certain real estate was recorded in the personal name of these employees and advisors on the records of the Bahamas,” he said.

Ray was named CEO of FTX less than a week ago when the company filed for bankruptcy protection and its CEO and founder Sam Bankman-Fried resigned. The embattled cryptocurrency exchange, short billions of dollars, sought bankruptcy protection after the exchange experienced the crypto equivalent of a bank run.