FTX managers used emojis to approve official spending, says new CEO

  • FTX employees claimed expenses through chat messages, its new CEO said.
  • Random handlers would then endorse official claims using custom emojis, John Ray added.
  • In his damning report, Ray said FTX failed to keep communications, hiring, and financial records.

Employees of crypto exchange FTX would file refund requests through chat messages, and random managers would approve the requests by responding with emojis, the company’s new CEO said in court filings .

New CEO John Ray said FTX employees submit payment requests to a “disparate group of supervisors,” who would approve expenses “by responding with personalized emojis,” FTX’s bankruptcy filing said Thursday.

“Receivables lacked the type of disbursement control that I believe is appropriate for a commercial enterprise,” Ray said.

Ray, an attorney who also oversaw the bankruptcy of energy giant Enron, was brought in to lead the restructuring of FTX. The exchange filed for bankruptcy on November 11.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial reporting as has happened here,” Ray said.

He lambasted FTX executives and former CEO Sam Bankman-Fried, saying they also failed to keep track of their communications when making decisions, among a litany of other allegations of mismanagement. .

“One of the most pervasive failures of the FTX.com business in particular is the lack of lasting records of decision-making,” Ray said, according to the filing. “Mr. Bankman-Fried often communicated using apps that were set to self-delete after a short period of time.”

He added that Bankman-Fried would encourage employees to use the same chat software.

Ray said FTX “never held board meetings” and that the exchange used employees’ personal names to purchase real estate in the Bahamas with corporate funds.

He also said FTX failed to keep proper records of the people it hired. “Repeated attempts to locate certain alleged employees to confirm their status have been unsuccessful to date,” he said, hinting that some of these employees may never have existed.

Ray criticized Bankman-Fried in particular, saying the exchange co-founder “continues to make erratic and misleading public statements.” He pointed to a Vox report that alleged Bankman-Fried sent a DM to reporter Kelsey Piper saying “damn regulators” and that “they’re making everything worse.”

Bankman-Fried resigned on Nov. 11, the same day FTX filed for bankruptcy. His trading company, Alameda Research, and about 130 affiliated companies have filed for bankruptcy.

Prior to the FTX explosion, rival crypto exchange Binance was set to acquire the company. But he backed down, citing findings from the due diligence process and concerns from federal investigations into FTX.

FTX and Bankman-Fried did not immediately respond to Insider’s requests for comment.

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