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Home Crypto Exchanges

FTX CEO John Ray testimony earlier than Congress

by cryptostandard
in Crypto Exchanges
Reading Time: 5 mins read
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Haru Invest

On Dec. 13 at 10 am ET, John J. Ray III, CEO of the FTX Group, sat as a witness on a listening to entitled “Investigating the collapse of FTX, Half I.”

Addressing the committee, Ray described the FTX state of affairs as the results of the next:

“A small group of grossly inexperienced and unsophisticated people who didn’t implement nearly any of the methods or controls which might be essential for an organization entrusted with different peoples cash or property.”

Ray stated that it “instantly grew to become clear” to him that he wanted to file for Chapter 11, and he has since taken “significant steps” to regain “command and management” of the state of affairs.

Ray’s testimony was revealed earlier than the listening to, which was coated by CryptoSlate earlier within the day.

Questions from the Home highlights

Mrs. Wagnar questioned Ray on his previous feedback describing the FTX debacle as “worse than Enron.”

Ray responded by saying that “actually there’s no recordkeeping by any means. It’s the absence of recordkeeping.”

Ray detailed that the recordkeeping was managed utilizing  Slack for invoicing/bills and by way of Quickbooks.

“Nothing towards Quickbooks, very good software, simply not for a multi-billion greenback firm. There’s no impartial board. We had one particular person actually controlling this.”

Wagner questioned Ray on whether or not SBF may have transferred buyer funds to Alameda as a “mistake.” Ray responded, stating that he didn’t discover “any such statements credible.”

Chapter lawyer and chair of the subcommittee on client, safety, and monetary establishments, Mr. Perlmutter, highlighted a priority that Ray’s job is to:

“Collect as many property as you possibly can and that could possibly be from some very harmless individuals who acquired paid cash to then unfold it out equally amongst who you assume the true collectors are.”

In response to the priority, Ray detailed the complexity of figuring out the “ins and out” state of affairs because of the “comingling of property.

“That makes it a bit extra sophisticated than merely how a lot is my coin price?”

Mr. Huizenga then questioned whether or not buyer funds from FTX.com have been transferred to Alameda Analysis. In response, Ray stated, “positively, the property of consumers within the .com silo have been transferred to Alameda, no query about it.”

Ray then highlighted the priority at the moment being investigated: “whether or not or not there may be comingling between the .com silo and the U.S. silo exchanges.”

Huizenga turned then in the direction of household involvement within the case, enquiring whether or not SBF’s father, Mr. Bankman obtained fee from FTX. Ray confirmed that “the household did obtain funds.”

Huizenga met with SBF on Dec. 8, 2021, accompanied by his father, Mr. Bankman. Noting that SBF was quarter-hour late to that assembly, Huizenga stated:

“I requested and centered on what kinds of regulation he was underneath his engagemnet with regulators and the way that affected FTX however plainly there’s much more to uncover right here.”

Subsequent, Mr. Emmer mentioned Gary Gensler with Ray, stating:

“We all know that Chair Gensler had extra conferences with FTX than anybody else within the crypto business.”

Emmer stated that what was being negotiated was a “framework for digital asset alternate registration and token registration with the SEC that will profit each events.

Emmer detailed that this framework would “broaden the SEC’s jurisdiction in alternate for the SEC’s preferential therapy of FTX over different business individuals.”

Explaining that Chair Gensler has refused to reply committee questions or testify earlier than the committee, Emmer questioned Ray whether or not he would share “any inside paperwork” concerning communication between FTX and Mr. Gensler or others of the SEC.

Ray stated:

“We are able to actually work together with your workers to get you what you want.”

Ray then confirmed to Mr. Steil that property have been moved out after the chapter. Ray continued to disclose that funds have been transferred after the petition date and have been achieved each as part of a hack and by the Bahamian authorities with the assistance of SBF.

“It’s our view that it violated the automated keep of chapter.”

Underneath questioning whether or not SBF was working to undermine the chapter proceedings, Ray responded by saying, “it seems so.”

“We now have opened as much as share every thing we’ve got with the Bahamian authorities.”

Ray additionally acknowledged that he had not seen an identical stage of transparency from the Bahamas.

Overview

Whereas some new info was disclosed in the course of the listening to, a number of Home Committee members used their time to assault crypto, calling it “a backyard of snakes” and “like counting chewing gum.”

A lot of the listening to ignored the relevance of FTX.US, the one entity regulated in the USA, with most clients being U.S. residents. As a substitute, the dialog centered on FTX.com and Alameda Analysis, together with the potential 2% of FTX.com customers who reside within the U.S.

Members of the Committee confirmed a lack of information of blockchain as they failed to understand primary terminology akin to “token minting,” with Mr. Vargas even declaring, “I don’t get the purpose of cryptocurrency, to start with…aside from when you’re a terrorist or somebody that desires to cover cash.” Mr. Cleaver even instructed that the business ought to rebrand to “CreepyDoCurrency” as a substitute of ‘cryptocurrency.’

Ray, nevertheless, selected not the throw the crypto business underneath the bus by dodging questions on whether or not crypto must be regulated by the SEC or CFTC.

The present CEO typically acknowledged that he was unable to touch upon particular issues associated to totals of losses or the timeframe for patrons to have the ability to make withdrawals. He additionally stated that he was not sure whether or not FTX.US clients would obtain 100% of the funds they deposited onto the U.S.-regulated alternate.

Worryingly, Ray additionally revealed that he had not but been capable of finding all of the personal keys for all of the FTX wallets which were recognized however that his staff is discovering new funds daily.

Full protection of the listening to was live-streamed on CryptoSlate’s YouTube channel.

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Tags: Bitcoin NewsCEOCongressCrypto NewsCrypto StandardCrypto UpdatesFTXJohnLatest Bitcoin NewsRayTestimony
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