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FTX’s latest bankruptcy filing is a miserable read for customers. The new chief executive of the collapsed cryptocurrency exchange, insolvency veteran John Ray, uncovered giant financial gaps and signs of looting. Formidable backers such as Temasek and Sequoia could have stopped it with some basic oversight, but at least they now have a chance to never make the same sloppy mistakes again.

Ray’s first in-depth account, submitted to the court on Thursday, reveals a brazen lack of controls and governance. Financial statements dated to Sept. 30, when founder Sam Bankman-Fried was in charge, contain no record of customer liabilities at either the U.S. subsidiary or the international division. In other words, it’s not yet clear how much money Ray should be trying to recover for creditors. He and his advisers at Alvarez & Marsal have struggled to compile an accurate list of FTX bank accounts, meaning they also don’t know how much cash it has.

The September balance sheets list almost $4 billion of assets across the two main exchanges, though Ray doubts their accuracy. Most troublingly, he identified signs of what could be “very substantial” transfers of money out of the businesses shortly before it filed for bankruptcy. In other words, it’s hard to see users with funds stuck in FTX getting much of it back. Ray, who has more than 40 years of legal and restructuring experience, including at the infamous Enron, described the mess as “unprecedented”.

Despite the scale of the meltdown, and Bankman-Fried’s previous reputation as a savvy financial operator, there’s nothing sophisticated about the impropriety detailed in Ray’s report. FTX had no cash-management system. Employees submitted requests to make corporate payments in chat rooms, where managers would issue approvals with emojis. Many of the FTX corporate entities never had board meetings. Ray says he has never heard of one of FTX’s main auditors, Prager Metis, but notes that it has a “metaverse headquarters”.

It’s clear from the documents that basic supervision, such as a functional board and heavyweight auditors, might have kept Bankman-Fried in check. The long A-list of investors, which also includes SoftBank Group and the Ontario Teachers’ Pension Plan, effectively gave him free rein. The only silver lining is that they might just learn something from this disastrous episode.

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