Benzinga - The new management of FTX on Sunday released the first interim report on the cryptocurrency exchange’s control failures.
What Happened: The 45-page report highlights FTX’s disorganized record-keeping, nonexistent cybersecurity defenses and lack of expertise in crucial areas such as finance.
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The report describes key areas of concern, such as Alameda Research, the trading firm that reportedly had access to billions of dollars in customer funds stored with FTX.
According to the report, Alameda “often had difficulty understanding its positions” and struggled to hedge or account for them.
Former CEO Sam Bankman-Fried, who is currently under house arrest and facing criminal charges, referred to Alameda as “hilariously beyond any threshold” of auditors being able to get through an audit.
The report goes on to state that “Alameda is unauditable,” citing difficulties in accurately tracking assets and comprehensive transaction history.
"In this report, we provide details on our findings that FTX Group failed to implement appropriate controls in areas that were critical for safeguarding cash and crypto assets. 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," said John Ray III, who took over from Bankman-Fried as CEO of FTX after its collapse, in the report.
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