John Ray, the chief restructuring officer and new CEO of fallen cryptocurrency exchange FTX, is wasting no time.
Eight days after being named head of the restructuring of Sam Bankman-Fried’s empire, he is moving forward to liquidate the group’s assets.
Ray, who served as the liquidator of insolvent energy brokerage Enron, has just announced that he has hired an outside counsel to review FTX’s assets and decide how to proceed. The goal is to sell certain assets with the approval of the judges.
“The FTX debtors have engaged Perella Weinberg Partners LP as lead investment bank and commenced preparation of certain businesses for sale or reorganization,” Ray’s office said in a statement on Nov. 19.
“The engagement of PWP [Perella Weinberg Partners] is subject to Court approval.”
Ray also indicates that some FTX subsidiaries are solvent, which is good news for creditors of the platform who hope to be able to recover some of their money.
“Based on our review over the past week, we are pleased to learn that many regulated or licensed subsidiaries of FTX, within and outside of the United States, have solvent balance sheets, responsible management and valuable franchises,” said Ray in the statement.
“Some of these subsidiaries – such as LedgerX LLC and Embed Clearing LLC, for example – are not debtors in the chapter 11 cases. Other subsidiaries – such as FTX Japan KK, Quoine Pte. Ltd, FTX Turkey Teknoloji Ve Ticaret A.Ş., FTX EU Ltd, FTX Exchange FZE and Zubr Exchange Ltd – are debtors.”
He continued: “Either way, it will be a priority of ours in the coming weeks to explore sales, recapitalizations or other strategic transactions with respect to these subsidiaries, and others that we identify as our work continues.”
Ray then calls for patience “as we put in place the arrangements that corporate governance failures at FTX prevented us from putting in place prior to filing our chapter 11 cases.”
These announcements come two days after he painted an unflattering portrait of the Bankman-Fried regime. In a 30-page document filed with the United States Bankruptcy Court for the District of Delaware, Ray described a company whose practices seem surreal. What dominates here are lawless cowboys.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray wrote. “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”
According to the new CEO, Bankman-Fried received a personal loan of $1 billion from Alameda. The firm also gave a $543 million personal loan to Singh, and $55 million to Ryan Salame, the co-CEO of FTX Digital Markets, one of FTX’s affiliates.
Alameda Research was Bankman-Fried’s trading platform. There were closed ties between FTX and Alameda.
“In the Bahamas, I understand that corporate funds of the FTX group were used to purchase homes and other personal items for employees and advisors,” the seasoned executive said.
“I understand that there does not appear to be documentation for certain of these transactions as loans, and that certain real estate was recorded in the personal name of these employees and advisors on the records of the Bahamas.”