Crypto

Crypto Crash: FTX Launches Asset Review, Seeks Legal Relief to Pay Major Vendors

Saturday, November 19, 2022 11:11 a.m.

Photo illustration of FTX logo and mobile app ads (Photo illustration by Leon Neal/Getty Images)

Collapsed crypto exchange FTX said it has launched a strategic review of its global assets and is preparing to sell or reorganize some of its businesses.

FTX said the review of its global assets would “begin to maximize recoverable value for stakeholders.”

The exchange and its affiliates filed for bankruptcy in Delaware last week, leaving about a million customers and other investors facing total losses of billions of dollars.

In a file this morningThe exchange, along with about 101 affiliates, has now sought legal relief to allow a new global cash management system to operate and pay its critical suppliers.

Today’s filing sought approval to pay pre-petition claims of up to $9.3 million to its critical suppliers after an interim order and up to $17.5 million after the entry of the final order.

“Based on our review last week, we are pleased to learn that many of FTX’s regulated or licensed affiliates, inside and outside the United States, have sound balance sheets, responsible management and valuable franchises,” said new FTX CEO John Ray. said.

Ray criticized a “complete failure of corporate controls” and “lack of reliable financial information” at the company, in court documents released Thursday.

John Ray III, who oversaw the liquidation of fraudulent energy company Enron in the early 2000s, was parachuted in to succeed ousted founder Sam Bankman-Fried to oversee the company’s liquidation after it collapsed.

“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,” he said.

“From the compromised integrity of systems and faulty regulatory oversight overseas, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented. “

Ray is in shape to help clients of collapsed businesses recoup some of their losses, having recently worked at bankrupt mortgage lender Residential Capital, where he helped recover $1.8 billion for creditors by suing mortgage originators.

As head of Enron during its years-long bankruptcy, Ray struck deals with lenders accused of helping him deceive investors, including a $1.66 billion deal with Citigroup in 2008.

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