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In a new filing with a Delaware bankruptcy court, newly appointed FTX Chief Executive John J. Ray III said that never in his 40-year legal career of restructuring experience has he seen such large corporate failure as what happened to the cryptocurrency exchange.

FTX Trading Ltd., once the world’s third-largest crypto exchange, filed for Chapter 11 bankruptcy on Friday after it rapidly collapsed following news about how CEO Sam Bankman-Fried ran the corporate structure of his crypto empire led to rumors of insolvency and a liquidity crisis.

Ray cited his experience overseeing the liquidation of the disgraced energy giant Enron, which was cited for criminal malfeasance, bad bookkeeping and failure to follow regulatory compliance. With that experience under his belt, he didn’t hold back in a scathing opinion about how FTX itself was handled.

“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 wrote in the court filing. “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.”

Continuing in the filing, Ray commented that he did “not have confidence” in the accuracy of the company’s balance sheets and its sister company Alameda Research, which were reported to have extremely close ties. He wrote that they were unaudited and produced while Bankman-Fried was in control and therefore probably incorrect.

Also according to the filing, FTX Group corporate funds had been appropriated to “purchase homes and other personal items for employees and advisors,” wrote Ray. However, records for some of these transactions appear to be either missing or recorded under the personal names of employees.

Another problem that came up is that FTX has no internal accounting department and instead outsources that function. Ray said that means that it may take “some time” to finalize a full audit of the entire structure.

He added that FTX’s approach to human resources has such poor record-keeping employees and contractors that at this time the company has “been unable to prepare a complete list of who worked for the FTX Group.”

Woes for FTX’s restructuring efforts started almost immediately after Ray took over as CEO on Friday in conjunction with the bankruptcy filing. Mere hours after the filing, the exchange was hacked for almost $400 million. FTX and its U.S. affiliate FTX US immediately moved to secure funds and informed users that the hack was real, warning them not to visit the site because it may download viruses.

As for Bankman-Fried, he told Vox interviewer Kelsey Piper that he intends to raise $8 million from outside investors in the next two weeks. Even before the bankruptcy, Bankman-Fried attempted to raise money from investors in order to save the exchange. It is unlikely he will be able to raise money now that the exchange has filed for bankuptcy.

During FTX’s dramatic collapse, rival crypto exchange Binance Holdings Ltd., the No. 1 exchange by volume, offered to acquire FTX to resolve the company’s liquidity crisis but backed out within 24 hours. At the time, after a quick glimpse at the company’s accounts, Binance said FTX was beyond saving.

Image: FTX

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