Crypto exchange FTX went bankrupt last week (opens in new tab). The liquidity crisis exposed a financial black hole that no one yet knows the full extent of, and the man charged with overseeing FTX's bankruptcy and revealing what this company was up to believes this is even worse than Enron.

And he should know. John Ray III has been involved in legal restructuring for over 40 years, including serving as CEO during the liquidation of Enron and working on the bankruptcies of such giants as Nortel, Residential Capital, and Overseas Shipholding. He has now filed a declaration (opens in new tab) with the Delaware Bankruptcy Court regarding his initial findings on FTX. The declaration begins with the assertion that "Never in my career have corporate controls been so completely dysfunctional and financial information so completely lacking in trust as in this case."

It goes on to outline the FTX's "compromised systems integrity and misguided regulatory oversight abroad" and the concentration of power in the hands of "a very small group of inexperienced, unsophisticated and potentially compromised individuals," adding that "this situation is unprecedented."

To fully understand this context, let's pause for a moment. The Enron scandal was the largest bankruptcy in U.S. history in 2001. It was the ultimate example of what happens when regulators fall asleep at the wheel and remains a symbol of corporate scandal to this day. You know this is incredible when the man who was in charge of Enron's restructuring is now white eyed over the current state of the FTX.

At the end of this submission is a chart (opens in new tab) listing over 100 companies associated with the FTX spread across 27 countries. It shows how the company's leaders were funneling money and making financial bets with their clients' cash without seeming to affect the FTX's balance sheet.

At the same time, Ray notes that "there is no permanent record of decision-making" and that former CEO Sam Bankman-Fried "often communicated through an application that was set to be automatically deleted after a short period of time and encouraged employees to do the same." He points out. Don't tell me you're up to something; tell me you're up to something.

Other eyebrow-raising facts include the fact that company funds were used to purchase "housing and other personal items for employees and advisors" in the Bahamas. There is no documentation to suggest that these were loans, and Bahamian records state that "certain real property was recorded in the personal names of these employees and advisors. If only every job came with a free vacation home in the Bahamas. ......

Ray stated that a "significant portion" of FTX's assets are "missing or stolen." The bankruptcy proceedings have secured about $740 million in cryptocurrency so far, but filings indicate that "at least $372 million in unauthorized transfers" were made on the same day FTX filed for bankruptcy. These transfers are currently under investigation.

Ray has repeatedly indicated that he does not trust the company's accounts, either now or in the past, and has warned creditors not to accept FTX's information as accurate.

As for FTX's former CEO, Sam Bankman-Fried (who is more responsible than anyone else for the company and who has said in interviews that he regrets filing for bankruptcy), the filing concludes on a somber note (opens in new tab). Ray emphasizes that Bankman-Fried is no longer in control of the company and does not speak for FTX. According to him, Bankman-Fried is now in the Bahamas (of course) and "continues to issue erratic and misleading public statements."

According to Ray, Bankman Fried's "Bahamian connections and financial status remain unknown to me," and the former CEO "recently told a reporter on Twitter: regulators make everything worse," and that the next step is to "win the jurisdictional battle with the State of Delaware." He suggested that the next step is to 'win the jurisdictional battle with the State of Delaware. "Of course, that's what the Delaware courts want to hear.

The collapse of FTX is another low point in what has been a terrible year for crypto, and cynics may be wondering what happens next. One of the hallmarks of these assets is that they are all interconnected, and the FTX domino effect is still going on; FTX is expected to have over a million creditors (good luck to them), and as well as bankruptcy proceedings, regulators around the world have been trying to find ways to keep one of the largest crypto exchanges on the planet until recently They are keeping a close eye on the smoking ruins of the exchange, which until recently was one of the largest crypto exchanges on the planet. [The Bahamas has an extradition treaty with the United States.