Bankruptcy proceedings are about locating assets, determining how much they are worth and then distributing them to whoever they rightfully belong. Based on such criteria, the FTX Chapter 11 case can now be confirmed as an official nightmare.
On Thursday, its new chief executive, John Ray III, wrote in detailed court papers that the FTX debacle was “a complete failure of corporate controls and [demonstrated] such a complete absence of trustworthy financial information”. Ray had once helped clean up Enron so presumably he is not easily disturbed.
In the filing, Ray first delineated the four silos of FTX operations. These were a US-based trading platform, a segment making venture capital-like investments, the Alameda Research crypto trading arm and the main offshore unit. The last held the bulk of customers’ accounts.