FTX Bankruptcy Is the Most Brutal Collapse in the History of Corporate America.
With these words, James Bromley, FTX’s lawyer, described the fall of Sam Bankman-Fried’s empire at the FTX bankruptcy first hearing.
Following the bankruptcy of the giant FTX, a first hearing was held Tuesday, November 22, 2022, in the federal court of Delaware in the United States. One of FTX’s lawyers, James Bromley, painted a bleak picture of the company. That’s the least we can say!
Samuel Bankman-Fried (SBF), the former FTX boss, created a business empire that was run as his “personal fiefdom,” the attorney said.
“The lack of corporate controls was at a level that none of us in the profession … have ever seen,” he considered. SBF, which wanted to be a king of innovation, even managed to innovate at this level …
The lawyer’s comments are reminiscent of those made by John J. Ray III, the new boss of FTX, who had “never seen such corporate management in his 40-year career.” As a reminder, the latter is the former liquidator of the American giant Enron, which went bankrupt in the 2000s. When it comes to bad company management, John J. Ray III knows a lot. To see him so frightened in front of the fallen empire of SBF is revealing.
The lawyer also made a less than reassuring statement: “A substantial amount of FTX’s assets were stolen or missing,” he said. He gave few specifics, but it could be the hack that took place on the FTX platform a day after its bankruptcy.
Besides, one of the questions was whether FTX should disclose information about its creditors when it has more than a million of them. According to Judge John Dorsey, such a release is not an option, at least at this stage. “Everyone in this room knows that the Internet is fraught with potential dangers,” he said. “It’s important that we protect the people who want to participate in this.”
As a reminder, the company disclosed a list of its 50 largest creditors, giving only the amounts involved, not the identities. FTX is under investigation by the Securities Exchange Commission and the Department of Justice in New York. Similarly, FTX is being investigated by the police in the Bahamas, the tax haven where FTX is headquartered.
Today, FTX’s new management team is cooperating with the specialized firm Chainalysys and international regulators. “We are also in constant communication with the U.S. Department of Justice, and in constant communication with the SEC and CFTC,” said James Bromley.
In December 2022, the FTX team is scheduled to appear before the U.S. Senate and House Financial Services Committee.
As a reminder, FTX was considered the second largest cryptocurrency exchange platform, with a valuation of $32 billion at the beginning of 2022. But on Friday, November 11, 2022, the platform filed for bankruptcy in the U.S., a choice that was reportedly made “reluctantly” according to SBF.
“You’ve seen probably one of the most abrupt and difficult collapses in the history of corporate America,” James Bromley considers. At the end of SBF’s reign, “the emperor had no clothes,” he concludes. Harsh words, but true, since SBF was so irresponsible and acted outrageously without any consideration for the FTX customers who trusted him.
To date, FTX would have 1.24 billion dollars of liquidity while it already owes 3.1 billion dollars to its 50 largest creditors. And all this is just the beginning of the FTX saga because, in the coming weeks, we will learn more and more staggering things every day about what will remain the biggest scandal of the year 2022 in the cryptocurrency world. And yes, even Do Kwon’s Terra Luna ecosystem explosion seems on a lower level based on the latest information.