{"id":526680,"date":"2022-12-13T23:41:28","date_gmt":"2022-12-13T20:41:28","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/ftx-hearing-6-big-revelations-from-house-panel-questioning\/"},"modified":"2022-12-13T23:41:28","modified_gmt":"2022-12-13T20:41:28","slug":"ftx-hearing-6-big-revelations-from-house-panel-questioning","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/ftx-hearing-6-big-revelations-from-house-panel-questioning\/","title":{"rendered":"#FTX hearing: 6 big revelations from House panel questioning"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a25e8633328f\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a25e8633328f\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/ftx-hearing-6-big-revelations-from-house-panel-questioning\/#FTX_hearing_6_big_revelations_from_House_panel_questioning\" >FTX hearing: 6 big revelations from House panel questioning<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/ftx-hearing-6-big-revelations-from-house-panel-questioning\/#FTX_collapse_was_Enron-like_in_scale_but_not_sophistication\" >FTX collapse was Enron-like in scale but not sophistication\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/ftx-hearing-6-big-revelations-from-house-panel-questioning\/#We_dont_know_how_much_money_FTX_lost_or_has\" >We don\u2019t know how much money FTX lost or has<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/ftx-hearing-6-big-revelations-from-house-panel-questioning\/#No_walls_between_FTX_leaders_Alameda_customers_money\" >No walls between FTX leaders, Alameda, customers\u2019 money<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/ftx-hearing-6-big-revelations-from-house-panel-questioning\/#SBF_got_millions_of_dollars_in_loans_from_FTX_%E2%80%94_and_himself\" >SBF got millions of dollars in loans from FTX \u2014 and himself<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/ftx-hearing-6-big-revelations-from-house-panel-questioning\/#FTX_customer_money_may_be_too_mixed_up_to_fully_sort_out\" >FTX customer money may be too mixed up to fully sort out<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/buradabiliyorum.com\/en\/ftx-hearing-6-big-revelations-from-house-panel-questioning\/#Tensions_are_emerging_between_Ray_and_the_Bahamian_government\" >Tensions are emerging between Ray and the Bahamian government<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"FTX_hearing_6_big_revelations_from_House_panel_questioning\"><\/span>FTX hearing: 6 big revelations from House panel questioning<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<p><img decoding=\"async\" src=\"https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2022\/12\/f5da4844e39f4d0da3e177ad90677003.jpg?w=900\" \/><\/p>\n<div>\n<p>The first House hearing on the collapse of FTX didn\u2019t have the company\u2019s disgraced founder and former CEO, Sam Bankman-Fried, who was arrested on the eve of his highly anticipated testimony. But lawmakers still drew crucial revelations about the company\u2019s demise from John J. Ray III, a veteran of corporate bankruptcies t<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ed to clean up the mess left by Bankman-Fried.<\/p>\n<p>Ray, who has shepherded Enron and other high-profile companies through bankruptcy, laid out the stunning lack of oversight, experience and scruples that led to FTX\u2019s\u00a0demise. He also explained how hard it would be to make customers whole and how Bankman-Fried\u2019s lengthy apologies were simply a cover for \u201cold-fashioned embezzlement.\u201d<\/p>\n<aside class=\"ad-unit ad-unit--mr1_ab\"><\/aside>\n<h2><span class=\"ez-toc-section\" id=\"FTX_collapse_was_Enron-like_in_scale_but_not_sophistication\"><\/span>FTX collapse was Enron-like in scale but not sophistication\u00a0<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Ray and lawmakers frequently compared the demise of FTX to that of Enron, the Texas energy company that collapsed in 2001 and caused $11 billion in losses after years of inflating and lying about its financial holdings. While Ray said he\u2019s unsure of FTX\u2019s total losses, he estimated the company has already lost $8 billion of customer money.<\/p>\n<p>The big difference, Ray said, was how conspicuously FTX leaders were ripping off customers and mismanaging money.<\/p>\n<p>\u201cEnron was really a different company. Crimes that were committed there were highly orchestrated financial machinations by highly sophisticated people to keep transactions off balance sheets,\u201d Ray said.\u00a0<\/p>\n<p>\u201cThis is really just old-fashioned embezzlement. This is just taking money from customers and using it for your own purpose,\u201d Ray continued. \u201cSophisticated, perhaps, in the way they were able to sort of hide it from people, frankly, right in front of their eyes.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"We_dont_know_how_much_money_FTX_lost_or_has\"><\/span>We don\u2019t know how much money FTX lost or has<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>FTX\u2019s lack of adequate record-keeping helped lay the groundwork for its collapse, Ray said, and has made it incredibly difficult to figure out the company\u2019s total assets and outstanding debts.<\/p>\n<p>\u201cEven in the most failed companies, you have a fair roadmap of what happened. We\u2019re dealing with literally a paperless bankruptcy in terms of how they created this company,\u201d Ray said, calling the lack of documentation \u201cunprecedented.\u201d<\/p>\n<aside class=\"ad-unit ad-unit--mr2_ab\"><\/aside>\n<p>FTX did not have a formal accounting department, Ray explained, despite the billions of dollars in customer money it was responsible for protecting. He added that FTX leaders used Slack, an online messaging system, to handle invoices and QuickBooks, an online bookkeeping program popular among small-business owners, to handle its assets.<\/p>\n<p>\u201cNothing against QuickBooks \u2014 very nice tool \u2014 just not for a multibillion-dollar company,\u201d Ray said.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"No_walls_between_FTX_leaders_Alameda_customers_money\"><\/span>No walls between FTX leaders, Alameda, customers\u2019 money<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Ray said FTX lacked basic controls any major company would impose to protect customer money, uphold terms of service and ensure FTX executives were not abusing their power.<\/p>\n<aside class=\"ad-unit ad-unit--mr3_ab\"><\/aside>\n<p>\u201cThis small group of grossly inexperienced, non-sophisticated individuals [did not] implement virtually any of the systems or controls that are necessary for a company entrusted with other people\u2019s money or assets,\u201d Ray said.<\/p>\n<p>Despite promising FTX customers that their money would not be used to support Alameda Research \u2014 Bankman-Fried\u2019s defunct crypto trading firm \u2014 the company treated Alameda both as its bank and as a customer, Ray said. Because FTX did not have a board of directors, no one stepped in to stop it.<\/p>\n<p>\u201cI find it difficult to believe that we\u2019re dealing with conscientious stupidity,\u201d said Rep. Al Green (D-Texas).<\/p>\n<aside class=\"ad-unit ad-unit--mr4_ab\"><\/aside>\n<p>\u201cIt seems to me that you have to be rather talented to do all of these things to the extent that they were done,\u201d he said.<\/p>\n<p>While a normal investment platform would have a bank to hold company and customer funds, FTX used Alameda to collect customer money. FTX leaders would then use that money to fund Alameda\u2019s operations or even their own personal investments, he explained, violating their pledges to customers and investors in both firms.<\/p>\n<p>\u201cIn order for these companies to exist, they\u2019ve got to be able to change their digital assets into hard U.S. dollars at some point, so you need a bank account. And so they needed Alameda to be able to do that,\u201d said Rep. Blaine Luetkemeyer (R-Mo.)<\/p>\n<p>\u201cThis should be a really big red flag for all of us who are in the financial services world,\u201d he continued.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"SBF_got_millions_of_dollars_in_loans_from_FTX_%E2%80%94_and_himself\"><\/span><strong>SBF got millions of dollars in loans from FTX \u2014 and himself<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Bankman-Fried\u2019s unfettered access to FTX and Alameda funds allowed<strong>\u00a0<\/strong>him to take millions of dollars in personal loans from the companies he owned, Ray said. While FTX executives took roughly $1.5 billion in payments from the company, it is unclear where all that money went and for what purposes.<\/p>\n<p>\u201cIn one instance, [Bankman-Fried] signed as both the issuer of the loan and the recipient of the loan,\u201d Ray said.<\/p>\n<p>Ray added that FTX executives had \u201cunlimited ability\u201d to borrow or take customer funds \u201cand deploy them for their own use,\u201d taking more than $1 billion for their own use.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"FTX_customer_money_may_be_too_mixed_up_to_fully_sort_out\"><\/span>FTX customer money may be too mixed up to fully sort out<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Any customers of a bankrupt company will face trouble getting\u00a0money\u00a0back from the firm as it goes through restructuring. But FTX customers may have even slimmer odds of being compensated for their losses given the company\u2019s lack of internal controls and reliance on volatile crypto assets.<\/p>\n<p>FTX spent at least $5 billion on \u201cmyriad businesses and investments,\u201d Ray said, that may be worth \u201conly a fraction\u201d of what the company paid. The crypto assets of customers for its U.S. platform were held in the same database as those of its international clients, and the steep decline in crypto prices over the past few months may make it impossible to sort out enough to make customers whole.<\/p>\n<aside class=\"ad-unit ad-unit--mr5_ab\"><\/aside>\n<p>Ray said his team has recovered roughly $1 billion worth of crypto assets so far and now has control of company bank accounts. But he said securing cash and other crypto assets has been \u201can ongoing adventure.\u201d<\/p>\n<p>Rep. Ed Perlmutter (D-Colo.), who was a bankruptcy attorney before he joined Congress, warned Ray he may need to spend \u201c100 years\u201d finding and disbursing FTX\u2019s assets.<\/p>\n<p>\u201cThat could be from some very innocent people who got paid money [by FTX],\u201d Perlmutter warned.<\/p>\n<p>\u201cYou\u2019re gonna be dealing with so many preferences, so many fraudulent transfers,\u201d he said. <\/p>\n<aside class=\"ad-unit ad-unit--mr6_ab\"><\/aside>\n<h2><span class=\"ez-toc-section\" id=\"Tensions_are_emerging_between_Ray_and_the_Bahamian_government\"><\/span>Tensions are emerging between Ray and the Bahamian government<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Ray and Bahamian government officials have sparred\u00a0for days over what should happen to FTX assets that new company leaders may still be able to access.\u00a0<\/p>\n<p>Ray told lawmakers Tuesday that he was unsure why millions of dollars in assets from FTX were moved after he and the company filed bankruptcy on Nov. 11. He also criticized the decision to allow roughly 1,500 Bahamas-based FTX customers to withdraw\u00a0a total of\u00a0roughly $100 million one day before the company filed for bankruptcy within the U.S., which would have frozen those assets.<\/p>\n<p>Ray suggested Bankman-Fried and the Bahamian government may have struck an agreement to allow such withdrawals, all while the founder knew bankruptcy proceedings would soon begin.<\/p>\n<p>But the Securities Commission of the Bahamas, the country\u2019s chief markets regulator, claimed Ray was misrepresenting its communications with Bankman-Fried and conflating Bahamian government officials with liquidators appointed by Bahamian courts to handle FTX\u2019s dissolution.\u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr7_ab\"><\/aside>\n<p>The commission also said it was \u201csecuring the transfer\u201d of FTX assets and holding them safely until a court decides how they should be distributed as per Bahamian law.<\/p>\n<p>\u201cKey misstatements made by [Ray] \u2026 do not appear to be concerned with facts but rather appear intended only to make headlines and advance questionable agendas,\u201d the Securities Commission of the Bahamas\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/SarahNEmerson\/status\/1602695853134725121\">said in a statement<\/a>.\n<\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/thehill.com\/policy\/finance\/3773834-ftx-hearing-6-big-revelations-from-house-panel-questioning\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>FTX hearing: 6 big revelations from House panel questioning The first House hearing on the collapse of FTX didn\u2019t have the company\u2019s disgraced founder and former CEO, Sam Bankman-Fried, who was arrested on the eve of his highly anticipated testimony. But lawmakers still drew crucial revelations about the company\u2019s demise from John J. Ray III,&#8230;<\/p>\n","protected":false},"author":1,"featured_media":526681,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2022\/12\/f5da4844e39f4d0da3e177ad90677003.jpg?w=1280","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[134344,70610,90482,124783,134540,134591,134419],"class_list":["post-526680","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-administration","tag-finance","tag-house","tag-international","tag-overnight-defense","tag-overnight-finance","tag-overnight-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/526680","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=526680"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/526680\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/526681"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=526680"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=526680"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=526680"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}