FTX’s new management is trying to distance itself from its founder. What is the reason for this?
The new CEO of bankrupt crypto exchange FTX, John Ray III, has made a new announcement on Twitter on behalf of the trading platform, in which he tries to distance himself from the actions of the previous person in his position. We’re talking, of course, about the exchange’s founder Sam Bankman-Friede, whose actions led to the current collapse of the coin market. This all comes after a series of bizarre tweets from the former billionaire, with which he may have simply been trying to attract media attention. We tell you more about what’s going on.
John Ray III has a background in advocacy, and especially in the specific processes that bankrupt large companies with billions of dollars in capitalization go through. Ray previously oversaw the $23 billion bankruptcy of energy company Enron Corp. That said, he says the FTX bankruptcy case is replete with some of the most egregious details in his memory in his legal practice.
What’s next for FTX?
Here is a translation of the published announcement of the new FTX chief from the exchange’s official account.
As previously announced, Mr Bankman-Fried resigned from FTX, FTX US, Alameda Research Ltd and their directly and indirectly owned subsidiaries on November 11. Mr. Bankman-Fried has no role in FTX, FTX US or Alameda Research Ltd. and does not speak on their behalf.
Announcement of new FTX management
Ray III wants to distance itself from the Bankman-Fried persona for a reason. Earlier, the Vox news outlet published an interview with the former FTX executive in the form of a private Twitter correspondence.
Bankman-Fried was unaware that his messages would become public and shared some previously undisclosed details. For example, all along he had been calling for regulation of the crypto industry for PR purposes only. In reality, regulators are supposedly “making things worse”. Also noteworthy here is the phrase “fuck the regulators” from Sam.
Bankman-Fried on financial regulators
Another screenshot of the correspondence – here the founder of FTX admits that all the talk about the ethics of the heads of big companies is mostly “empty soundbites”. The public will definitely like those who can come out of big conflicts or trouble victorious.
Bachmann-Fried on ethics
In the correspondence, Bachmann-Fried also cited what he sees as the main reasons for his failure – problems with the efficiency of financial flow accounting and the use of borrowed funds. If he’d had the chance to start over, Bachmann-Fried would have paid most attention to these aspects.
Bachmann-Fried on the main reasons for his failure
When the Vox article was published, Sam tweeted that his posts should not have been made public, although there’s nothing that can be done about that now. He allegedly “corresponded with a friend” but would not reveal the identity or account of the publication’s reporter in the dialogue. Here’s Bankman-Fried’s relevant tweet complaining about what was going on.
Bankman-Fried’s tweet
According to Decrypt’s sources, the leaks of correspondence are just part of a string of events that have finally finished off Bankman-Friede’s reputation in the wake of the FTX collapse. Earlier, he had started posting a Twitter thread with bizarre messages one letter at a time. They all folded into the phrase “What happened?”, meaning “What happened?”.
Bankman-Fried’s series of bizarre tweets
It later emerged that this was Bankman-Fried’s way of disguising the deletion of old posts from his account so that bots monitoring his account feed would not alert the cryptocommunity. Among the deleted posts was some very important information.
Deleting and adding tweets on Bankman-Fried’s page
Here, for example, is a tweet in which the former CEO assures that his company was audited in accordance with GAAP accounting standards.
One of the deleted tweets
So Bankman-Fried is now officially the person in no way publicly responsible for FTX on all matters that do not involve the restructuring of the exchange’s debt. The latter is being handled by John Ray III. He may have already been in talks with representatives of cryptocurrency broker Voyager Digital, which declared bankruptcy earlier this year. As a reminder, one of Voyager’s creditors was FTX.
The cryptocurrency broker’s bankruptcy case is now ongoing and its lawyers are “shocked by what has happened to FTX”. Voyager’s official unsecured creditors’ committee had announced the day before that it had resumed the process of raising funds for restructuring, adding in a press release that it had not transferred any assets to FTX US. However, the press release notes that the $5 million deposit made by FTX US in “goodwill” is in an escrow account.
Were it not for FTX Group’s bankruptcy, Voyager Digital’s creditors would have had until 29 November to approve or object to the restructuring plan. A hearing had also been scheduled for 8 December on the possible approval of the plan. But now “in light of the facts and circumstances surrounding the FTX bankruptcy” the plan confirmation hearing has been cancelled and the relevant deadlines are no longer in effect, Voyager’s lawyer Joshua Sassberg said in a notice filed with the court.
Voyager Digital is not the only organisation whose position has been undermined by the FTX collapse. Experts predict that there could be an avalanche of bankruptcies in the future for other companies that had a close financial relationship with the bankrupt exchange. So further cryptocurrency problems are a possible scenario. It’s not certain, though.
We think the actions of the new FTX chief are more than logical. Still, right now Sam Bunkman-Fried continues to publish bizarre statements and generate hatred within the cryptocurrency community. As such, the new representatives of the platform, which is awaiting liquidation, do not want to get another batch of problems because of this man. So such a strategy would clearly help not only John Ray, but also the company's former employees along with its creditors.
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