Expert Who Oversaw Enron Bankruptcy Says He's Never Seen 'Such a Complete Failure' as FTX

John Ray III, the newly appointed CEO of FTX who previously oversaw the restructuring of the infamous energy company Enron, says that he has never before seen “such a complete failure” of corporate controls as he has with FTX.

CNBC reports that FTX Chief Executive Officer John Ray III was blunt in a declaration to the U.S. Bankruptcy Court for the District of Delaware, stating that “in his 40 years of legal and restructuring experience,” he had never seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”

After the Enron implosion, Ray served as the company’s CEO. He says that he now plans to work with regulators to investigate FTX founder and democrat super donor Sam Bankman-Fried. Ray’s filing says that FTX and Alameda Research’s hastily created balance sheets were “unaudited and produced while the Debtors [FTX] were controlled by Mr. Bankman-Fried.”

According to Ray, Bankman-Fried’s systems and regulatory compliance controls were so lackadaisical that they amounted to gross negligence. “The concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals” was unprecedented, Ray said.

Ray added that a “substantial portion” of assets held by FTX may be “missing or stolen,” after widespread reports across social media of FTX users unable to withdraw funds and accusations of theft of hundreds of millions of dollars in cryptocurrency.

Ray wrote that under his new leadership, he planned to implement controls and corporate standards including “accounting, audit, cash management, cybersecurity, human resources, risk management, data protection and other systems that did not exist, or did not exist to an appropriate degree, prior to my appointment.”

Bankman-Fried and FTX “management practices included the use of an unsecured group email account as the root user to access confidential private keys and critically sensitive data for the FTX Group companies around the world, the absence of daily reconciliation of positions on the blockchain, the use of software to conceal the misuse of customer funds.”