According to a bankruptcy filing from the company’s new CEO, John Ray III, FTX used corporate funds to buy homes for its employees.
Ray, who was in charge of Enron’s restructuring, noted that “certain real estate” was listed as being directly owned in some employees’ personal names.
Ray attacked FTX’s lack of financial controls, claiming that the center of Sam Bankman-Fried’s empire was devoid of “corporate controls” and “reliable financial information.”
Days after the penthouse apartment of founder Sam Bankman-Fried was listed for nearly $40 million, a bankruptcy declaration claimed that corporate funds were used to buy homes in the Bahamas and “personal items” in the names of FTX employees and advisors.
The origin of those corporate funds was not immediately obvious.
Newly appointed FTX CEO John Ray III claimed in a declaration to the court that a lack of disbursement controls resulted in accounting for spending being done in a manner that was “not appropriate for a business enterprise.”
Corporate housing arrangements are common, particularly in high-priced areas, but Ray’s filing noted that this situation was unusual because “certain real estate was recorded in the personal name of these employees and advisors.”
A few days ago, a penthouse residence in the same exclusive complex where Bankman-Fried and other FTX executives resided was put on the market for just under $40 million. It has been widely reported that the former billionaire and founder of FTX owned the penthouse.
The former executive’s team was criticized by Ray in the same filing for having “completely no financial controls,” and he expressed his lack of confidence in the balance sheet statements of FTX’s companies.
Prager Metis, a company with “which I am not familiar with,” conducted the auditing for one of the FTX corporate verticals, or “Silos,” as Ray put it.
Bankman-Fried was unavailable for comment right away. An inquiry for comment was not immediately answered by Prager Metis.
Ray, who was in charge of Enron’s bankruptcy and restructuring, claimed to have 40 years of experience in both bankruptcy and business.
Ray wrote that the preparation of accurate financial statements would take “some time” because “the Debtors do not have an accounting department.”
Bankman-Fried’s cryptocurrency trading company Alameda Research, along with FTX and connected businesses, filed for Chapter 11 bankruptcy protection earlier this month.