FTX financial controls were a ‘hodgepodge’ of apps, says court filings
FTX was run by three inexperienced people “not long out of college,” who relied on “a hodgepodge” of online shared documents and communications across a series of different apps to manage the multi-billion dollar empire according to FTX CEO John Ray III.
In an April 9 court filing in a Delaware Bankruptcy Court, John J Ray III gave his first detailed account of the control failures at FTX.
Ray stated that his restructuring team had “identified extensive deficiencies in the FTX Group’s controls” from a lack of appropriate financial and accounting controls to an inadequate group management structure and record-keeping process.
FTX apparently “relied on a hodgepodge of Google documents, Slack communications, shared drives and excel spreadsheets” to manage its assets and liabilities.
FTX used the accounting software QuickBooks, which Ray said was designed for “small and mid-sized businesses” and not for a firm that operates across “multiple continents and platforms” such as FTX.
Related: Names of non-US FTX users demanded by mainstream media outlets
FTX’s bookkeeping was reported to have been neglected as around 80,000 transactions were left as unprocessed accounting entries in “catch-all QuickBooks accounts titled ‘Ask My Accountant.’”
Ray emphasized that co-founders Sam Bankman-Fried and Gary Wang, along with former engineering director Nishad Singh had the “final voice in all significant decisions,” despite very limited experience.
Wang and Singh’s significant control over FTX was noted by an unnamed FTX executive who stated that “if Nishad [Singh] got hit by a bus, the whole company would be done. Same issue with Gary [Wang].”
It was noted that the company couldn’t provide a complete list of its employees at the time of
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