Advisers who oversaw Enron bankruptcy, say FTX case is much worse

Bloomberg has reported that bankruptcy advisers, who are overseeing FTX now and before that also oversaw that of Enron Corp, have found only a tiny amount of funds in FTX’s crypto wallets and cash compared to the amount which the liquidity gap is believed to be now – $8 billion. Cardano founder Charles Hoskinson commented on his Twitter handle that the FTX case seems much worse than that of Enron.

FTX Advisers Find Only $740 Million in Crypto, While Liquidity Gap Stands at $8 Billion

The new head of the FTX exchange blamed the lack of funds in FTX Group’s wallets on the lack of centralized management of funds as a group of bankruptcy advisers only managed to locate $740 million worth of crypto and $560 million in cash. This is only a fraction of assets owned by the FTX Group in cash and crypto stored in cold wallets.


The new chief of FTX, John J. Ray III, stated that he has never encountered such a total failure of corporate controls and a complete lack of financial information that could be trusted in his long career.

In a document submitted in court, he also stated that a very small group of inexperienced persons conducted the control of funds and other vital aspects of the business. He added that the situation he found was unprecedented.

John J. Ray III stated that Sam Bankman-Fried did not control the company’s funds in a centralized manner. He did not have an accurate list of bank accounts. Nor did he pay much attention to how creditworthy his banking partners were.

Aside from the lack of centralized control over cash, according to Ray, the audited financial statements of FTX are not trustworthy. The advisers are now rebuilding FTX entities’ balance sheets. FTX seems like a “deeply flawed enterprise” to Ray.

He stated that all communications, including those in which important decisions were passed on, were made via phone apps where messages get deleted in a short while. Employees were ordered to use the same method to communicate among themselves. Besides, the advisers found out that corporate funds of FTX were used for purchasing houses and personal items for the company’s staffers. “Some of the real estates was recorded the personal names of employees and FTX advisers”

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