A report released by FTX company debtors found that the failed crypto exchange’s collapse resulted from “hubris” and “greed.”
- During an investigation, FTX debtors found that the company did not have basic financial and accounting controls, discouraged disagreement within the company, and internally made light of the company’s tendency to misplace millions of dollars worth of assets, Bloomberg reports.
- In the first report released by FTX debtors, the analysts write that the failure of the crypto exchange was “hubris, incompetence, and greed” on the part of the company’s top executives.
- The report found multiple instances of mismanagement, such as failing to have a complete list of employees when FTX first filed for bankruptcy.
Why it’s news
FTX’s sudden collapse in November rocked the crypto world, and customers lost billions of dollars. Since then, founder Sam Bankman-Fried has been under house arrest while awaiting trial on fraud and conspiracy charges, which is set for October.
As the FTX debtors continue with bankruptcy proceedings, officials are finding more concerning details about how poorly managed the crypto exchange really was, Bloomberg reports.
“Despite the public image it sought to create of a responsible business, the FTX Group was tightly controlled by a small group of individuals who showed little interest in instituting an appropriate oversight or control framework,” the report says.
“These individuals stifled dissent, commingled and misused corporate and customer funds, lied to third parties about their business, joked internally about their tendency to lose track of millions of dollars in assets, and thereby caused the FTX Group to collapse as swiftly as it had grown,” the report says.
Though the company was responsible for billions of dollars worth of assets and significant transaction volumes, FTX “lacked fundamental financial and accounting controls.”
The report also says that some assets had been recovered, and others are in the process. Around $1.4 billion are recovered and sitting in storage. Another $1.7 billion is in the process of recovery.