New Reports Related to the Bankruptcy of FTX and its Affiliates has provided new details that What Sam Bankman-Fried’s Crypto Empire Looks Like and Reveals More Details About Corporate Incompetence and Potential Corruption
The report was produced by John Ray III, the company’s CEO, and the external legal team. with more details on the chaos of the business of Bankman-Fried which described it as “arrogance, incompetence and greed”.
‘Hot’ wallets
If Bankman-Fried Not caught committing fraud It is possible that FTX and its affiliates will fail anyway. Due to numerous security concerns As stated in the new report, hot wallets’ keys that hold tens of millions of dollars’ worth of assets are not securely stored, and relying on hot wallets itself is against standard industry practice.
FTX Group holds almost all crypto assets in hot wallet It is more susceptible to hacking, theft, misappropriation and accidental loss than cold wallets as hot wallets require internet access,” the report states. wallet which is not connected to the Internet and is stored only in a limited number of hot wallets necessary for daily operations, trades and withdrawals of expected clients.”
Ray also accused Bankman-Fried and others “lied” when asked about security practices from customers and contractors.
According to FTX’s current executives, the private keys for wallets, including wallets containing over $100 million in “Ethereum assets,” are stored in plain text, unencrypted and easily accessible. The private keys for billions of dollars worth of additional digital assets are stored in an Amazon Web Services password manager that can be accessed by “many FTX employees”. And can transfer those assets manually whenever they want.
Alameda Research, a hedge fund affiliate of Bankman-Fried It has similar security issues.
FTX and Alameda Digital Assets May Be Lost Forever
In addition to the high risk of theft or hacking, the keys of some wallets are not backed up.
“Many of FTX Group’s private keys are stored without proper back-up, i.e. if keys are lost, associated crypto assets can be permanently lost.”
“Due to FTX Group’s failure to properly maintain access to private keys, employees or others may copy those private keys to their own electronic devices and transfer associated crypto assets without detection,” the report continued.
The former CEO of FTX also uses Alameda as his personal piggy bank. With tens of millions transferred to personal bank accounts in 2021 and 2022, the transactions are “Investment-cryptocurrency”
nodecentralize
The report states that Any decisions made by FTX are tightly controlled by a small group of executives, one of the executives said. If co-founder Gary Wang or head of engineering Nishad Singh can’t get the job done. All operations of multi-billion dollar companies will cease. Due to a lack of technical know-how among other leaders, including Bankman-Fried,
“If Nishad [Singh] Got hit by a bus, the whole company would be dead. Same goes for Gary. [Wang]”
No information on who did what?
“At the time of FTX Group’s bankruptcy filing, there was not even a current and complete list of who the company’s employees were,” the report said. Which business owner
Internal company messages are sent using Signal and Telegram with an automatic deletion function. making it difficult to confirm what was said meanwhile Tens of millions of company spending were either requested or approved using Slack emojis. Or almost no recording at all.
Ray, as well as FTX’s bankruptcy advisers and attorneys, said they would continue to revive the record-keeping mess they drafted. This is a regulation that helps explain the huge fees they pay.
The next court date in the bankruptcy case is April 12.