A lack of appropriate record-keeping and control failures as well as “greed” led to the collapse of cryptocurrency exchange FTX Group, a new report has found.
Despite the public image it sought to create of a responsible business, the FTX Group was tightly controlled by a small group of people who showed little interest in instituting an appropriate oversight or control framework, the report by the new management of FTX said on Sunday.
They stifled dissent 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 added.
“In this regard, while the FTX Group’s failure is novel in the unprecedented scale of harm it caused in a nascent industry, many of its root causes are familiar: hubris, incompetence and greed,” the new management said.
Sam Bankman-Fried — in pictures
FTX collapsed last November after a wave of withdrawals and consequently declared bankruptcy on November 11.
Its founder Sam Bankman-Fried, 30, was arrested in the Bahamas on December 12 after federal prosecutors in the US charged him with eight criminal counts — including conspiracy, wire fraud and money laundering — for allegedly misusing billions of dollars in customer funds before the $9 billion collapse of FTX and Alameda Research.
“FTX Group was tightly controlled by a small group of individuals who falsely claimed to manage FTX Group responsibly, but in fact showed little interest in instituting oversight or implementing an appropriate control framework,” John Ray, chief executive and chief restructuring officer of the FTX Debtors, said.
“We are continuing our efforts to review the events that factored into the fall of FTX and to identify and recover as much value as possible for creditors.”
Although the FTX Group consisted of many separate entities, transfers of funds among those entities were not properly documented, rendering tracing of funds extremely challenging, the report said.
Slack, Signal and other informal methods of communication were frequently used to document approvals. Signal and Telegram were at times used in communications with both internal and external parties with “disappearing messages” enabled, rendering any historical review impossible, the research revealed.
Expenses and invoices of the FTX Group were submitted on Slack and were approved by “emoji”.
“These informal, ephemeral messaging systems were used to procure approvals for transfers in the tens of millions of dollars, leaving only informal records of such transfers, or no records at all,” according to the report.
The management and governance of the FTX Group was largely limited to Mr Bankman-Fried, former director of engineering Nishad Singh and co-founder Gary Wang.
Among them, Mr Bankman-Fried was viewed as having the final say in all significant decisions.
“These three individuals, not long out of college and with no experience in risk management or running a business, controlled nearly every significant aspect of the FTX Group,” the new management said.
With isolated exceptions, the FTX Group lacked independent or experienced finance, accounting, human resources, information security, or cyber security personnel or leadership, and lacked any internal audit function. Board supervision was also effectively non-existent, the report said.
Efforts to clarify corporate responsibilities and enhance compliance were not welcome and resulted in backlash.
The FTX Group also lacked an appropriate organisational structure.
“Rather than having an ultimate parent company able to serve as a central point for decision-making that could also direct and control its subsidiaries, the FTX Group was organised as a web of parallel corporate chains with various owners and interests, all under the ultimate control of Mr Bankman-Fried.”
At its peak, the FTX Group operated in 250 jurisdictions, controlled tens of billions of dollars of assets across its various companies, engaged in 26 million transactions per day and had millions of users.
Despite these asset levels and transaction volumes, the FTX Group lacked fundamental financial and accounting controls, the new management said.
“The group did not have personnel who were experienced and knowledgeable enough to account accurately for assets and liabilities, understand and hedge against risk, or compile and validate financial reports.”
Fifty-six entities within the FTX Group did not produce financial statements at all. Thirty-five FTX Group entities relied on a hodgepodge of Google documents, Slack communications, shared drives, and Excel spreadsheets to manage their assets and liabilities, the report found.
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
COMPANY%20PROFILE
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65
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Your Guide to the Home
- Level 1 has a valet service if you choose not to park in the basement level. This level houses all the kitchenware, including covetable brand French Bull, along with a wide array of outdoor furnishings, lamps and lighting solutions, textiles like curtains, towels, cushions and bedding, and plenty of other home accessories.
- Level 2 features curated inspiration zones and solutions for bedrooms, living rooms and dining spaces. This is also where you’d go to customise your sofas and beds, and pick and choose from more than a dozen mattress options.
- Level 3 features The Home’s “man cave” set-up and a display of industrial and rustic furnishings. This level also has a mother’s room, a play area for children with staff to watch over the kids, furniture for nurseries and children’s rooms, and the store’s design studio.
UAE currency: the story behind the money in your pockets
Understand What Black Is
The Last Poets
(Studio Rockers)
Results for Stage 2
Stage 2 Yas Island to Abu Dhabi, 184 km, Road race
Overall leader: Primoz Roglic SLO (Team Jumbo - Visma)
Stage winners: 1. Fernando Gaviria COL (UAE Team Emirates) 2. Elia Viviani ITA (Deceuninck - Quick-Step) 3. Caleb Ewan AUS (Lotto - Soudal)
1,000 Books to Read Before You Die: A Life-Changing List
James Mustich, Workman
South Africa World Cup squad
South Africa: Faf du Plessis (c), Hashim Amla, Quinton de Kock (w), JP Duminy, Imran Tahir, Aiden Markram, David Miller, Lungi Ngidi, Anrich Nortje, Andile Phehlukwayo, Dwaine Pretorius, Kagiso Rabada, Tabraiz Shamsi, Dale Steyn, Rassie van der Dussen.
ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
Young women have more “financial grit”, but fall behind on investing
In an October survey of young adults aged 16 to 25, Charles Schwab found young women are more driven to reach financial independence than young men (67 per cent versus. 58 per cent). They are more likely to take on extra work to make ends meet and see more value than men in creating a plan to achieve their financial goals. Yet, despite all these good ‘first’ measures, they are investing and saving less than young men – falling early into the financial gender gap.
While the women surveyed report spending 36 per cent less than men, they have far less savings than men ($1,267 versus $2,000) – a nearly 60 per cent difference.
In addition, twice as many young men as women say they would invest spare cash, and almost twice as many young men as women report having investment accounts (though most young adults do not invest at all).
“Despite their good intentions, young women start to fall behind their male counterparts in savings and investing early on in life,” said Carrie Schwab-Pomerantz, senior vice president, Charles Schwab. “They start off showing a strong financial planning mindset, but there is still room for further education when it comes to managing their day-to-day finances.”
Ms Schwab-Pomerantz says parents should be conveying the same messages to boys and girls about money, but should tailor those conversations based on the individual and gender.
"Our study shows that while boys are spending more than girls, they also are saving more. Have open and honest conversations with your daughters about the wage and savings gap," she said. "Teach kids about the importance of investing – especially girls, who as we see in this study, aren’t investing as much. Part of being financially prepared is learning to make the most of your money, and that means investing early and consistently."
The bio
Favourite book: Peter Rabbit. I used to read it to my three children and still read it myself. If I am feeling down it brings back good memories.
Best thing about your job: Getting to help people. My mum always told me never to pass up an opportunity to do a good deed.
Best part of life in the UAE: The weather. The constant sunshine is amazing and there is always something to do, you have so many options when it comes to how to spend your day.
Favourite holiday destination: Malaysia. I went there for my honeymoon and ended up volunteering to teach local children for a few hours each day. It is such a special place and I plan to retire there one day.
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
More from Rashmee Roshan Lall
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Results
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HOW DO SIM CARD SCAMS WORK?
Sim swap frauds are a form of identity theft.
They involve criminals conning mobile phone operators into issuing them with replacement Sim cards, often by claiming their phone has been lost or stolen
They use the victim's personal details - obtained through criminal methods - to convince such companies of their identity.
The criminal can then access any online service that requires security codes to be sent to a user's mobile phone, such as banking services.
