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Lawyers representing crypto exchange FTX lifted the curtain on the company’s downfall during its first Chapter 11 bankruptcy hearing on Tuesday, revealing the latest findings as new management sorts out what a lawyer for FTX called the founder Sam Bankman Friedis the “personal fiefdom”.

James Bromley, partner at Sullivan and Cromwell and FTX representative, explained how a team of investigators worked around the clock to organize and secure the company’s assets, while explaining how the company’s downfall happened. produced.

james bromley

FTX attorney James Bromley, right, arrives in bankruptcy court in Wilmington, Delaware, on Nov. 22, 2022. (Photographer: Sarah Silbiger/Bloomberg via Getty Images) (Photographer: Sarah Silbiger/Bloomberg via Getty Images/Getty Images)

He told the judge that FTX was founded in 2017 and then “traveled the world”, starting in Berkley, California, before moving to Hong Kong, then Chicago, then Miami, before settling in the Bahamas. .

SAM BANKMAN-FRIED, FTX FOUNDER: WHAT TO KNOW ABOUT EX-CRYPTO EXEC

“At all times he was effectively under the control of Mr. Bankman-Fried, and effectively what we had was a lack of corporate controls on a level that none of us in this profession [that] watched it so far,” the attorney said.

FTX Sam Bankman Fried

Sam Bankman-Fried, founder and managing director of FTX Cryptocurrency Derivatives Exchange, speaks during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, August 17, 2022. (Photographer: Jeenah Moon/Bloomberg via Getty Images/Getty Images)

Bromley noted that new CEO John Ray III has established an independent board that “provides, for the first time in FTX history, a traditional and trusted governance structure.”

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Before Ray took over, Bromley said, FTX was under the “control of a small group of inexperienced and unsophisticated individuals.”

jay ray iii ftx ceo

John Ray, managing director of FTX Cryptocurrency Derivatives Exchange, arrives in bankruptcy court in Wilmington, Delaware, on Nov. 22, 2022. (Photographer: Eric Lee/Bloomberg via Getty Images) (Photographer: Eric Lee/Bloomberg via Getty Images/Getty Images)

The Delaware court heard how there are millions of customers impacted by billions in losses and agreed — for now — to keep the names of those creditors private.

FTX, BANKMAN-FRIED PARENTS AND SENIOR EXECUTIVES PURCHASED $121M OF BAHAMAS PROPERTIES: REPORT

Another new development is that the Department of Justice has now opened an investigation into the FTX hack attempts and the company’s missing “substantial” assets.

The FTX logo is seen at the entrance to the FTX Arena in Miami, Florida on November 12, 2022. (Reuters/Marco Bello/Reuters Pictures)

FTX attorneys noted that the company, under its previous leadership, shelled out about $300 million on real estate in the Bahamas, mostly homes and vacation properties, used by former executives.

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Reuters contributed to this report.



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