{"id":1774506,"date":"2022-12-14T06:10:07","date_gmt":"2022-12-14T11:10:07","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1774506"},"modified":"2022-12-14T07:18:33","modified_gmt":"2022-12-14T12:18:33","slug":"new-ftx-ceo-john-ray-commingling-client-funds-not-an-accident","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/new-ftx-ceo-john-ray-commingling-client-funds-not-an-accident\/","title":{"rendered":"New FTX CEO John Ray: Commingling Client Funds Not an Accident"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fnew-ftx-ceo-john-ray-commingling-client-funds-not-an-accident%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1774506&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>New <a href=\"https:\/\/www.theepochtimes.com\/t-ftx\">FTX<\/a> CEO John Ray testified before the U.S. House Financial Services Committee on Tuesday.\u00a0This is the first <a href=\"https:\/\/www.theepochtimes.com\/t-hearing\">hearing<\/a> in the committee\u2019s public investigation into the collapse of the crypto exchange.<\/p>\n<p>During the hearing, Ray told the committee that usage of <a href=\"https:\/\/www.theepochtimes.com\/t-ftx\">FTX<\/a> customer funds by Alameda was intentional, not an accident.\u00a0He also criticized FTX for poor record keeping, claiming that the company used QuickBooks for bookkeeping.<\/p>\n<p>FTX founder <a href=\"https:\/\/www.theepochtimes.com\/t-sam-bankman-fried\">Sam Bankman-Fried<\/a> was also scheduled to testify remotely, but he was detained by Bahamian law enforcement Monday evening. This comes after a U.S. court shared a sealed indictment with the authorities of the island nation.<\/p>\n<p>FTX filed for U.S. bankruptcy protection on Nov. 11, and <a href=\"https:\/\/www.theepochtimes.com\/t-bankman-fried\">Bankman-Fried<\/a> resigned as CEO on the same day. Ray <a href=\"https:\/\/www.theepochtimes.com\/mkt_app\/new-ftx-ceo-blasts-sam-bankman-fried-for-complete-failure-of-corporate-controls_4869500.html\">replaced<\/a> Bankman-Fried as chief executive to oversee the bankruptcy proceedings and locate missing funds.<\/p>\n<h2>Schemes and Insiders<\/h2>\n<p>In his <a href=\"https:\/\/financialservices.house.gov\/uploadedfiles\/hhrg-117-ba00-wstate-rayj-20221213.pdf\">prepared remarks<\/a> for the hearing on Dec. 13, Ray included \u201cthe commingling of assets\u201d in his list of \u201cunacceptable management practices at the FTX Group.\u201d He also confirmed what many media outlets have reported\u2014namely that FTX customer funds were funneled to Alameda to finance the latter company\u2019s trading schemes.<\/p>\n<p>Ray accused former FTX executives of embarking on a \u201cspending binge\u201d of more than $6 billion, of which more than $1 billion went to FTX \u201cinsiders\u201d in the form of personal loans or direct payments.\u00a0He elaborated on these personal loans during the hearing, specifically loans that went directly to Bankman-Fried.<\/p>\n<p>\u201cWhen Sam Bankman-Fried signs on behalf of the company and then he signs his own loan, that should tell you a lot right there.\u201d<\/p>\n<p>The acting CEO noted that he and his team are employing \u201cpainstaking forensic efforts\u201d to locate the company\u2019s missing assets.\u00a0However, Ray mentioned later in the hearing that \u201cat the end of the day, we\u2019re not going to be able to recover all the losses here.\u201d<\/p>\n<p>In a leaked draft of Bankman-Fried\u2019s prepared <a href=\"https:\/\/www.forbes.com\/sites\/stevenehrlich\/2022\/12\/13\/exclusive-transcript-the-full-testimony-sbf-planned-to-give-to-congress\/?sh=7fc693143c47\">remarks<\/a>, obtained by Forbes, the defamed founder criticized Ray for ignoring his offers of assistance. \u201cI have sent 5 emails to Mr. Ray. Mr. Ray has never responded, nor has he reached out to communicate with me in any other ways.\u201d<\/p>\n<p>Bankman-Fried insisted in his remarks that his inside knowledge of FTX could be useful as the new team attempts to track down assets.\u00a0The founder has also <a href=\"https:\/\/twitter.com\/WatcherGuru\/status\/1598077374159261696?ref_src=twsrc%5Etfw\">claimed<\/a> that FTX US is solvent and customers could be repaid today, and when asked about this, Ray stated bluntly, \u201cIt is not solvent. That\u2019s just inaccurate.\u201d<\/p>\n<p>In his opening statement, ranking member of the committee, Rep. Patrick McHenry (R-N.C.), said FTX \u201cappears to be the same old-school fraud, just using new technology,\u201d though he did have encouraging things to say about digital assets in general.<\/p>\n<p>\u201cI believe in the promise of digital assets and those around the world building on blockchain technologies.\u201d<\/p>\n<h2>\u2018Near-Zero\u2019 Record Keeping<\/h2>\n<p>Ray\u2019s opening statement included more harsh words for former FTX management, calling them \u201ca small group of grossly inexperienced and unsophisticated individuals.\u201d He added that the crypto exchange had \u201cnear-zero\u201d record keeping that would be expected from a billion-dollar company.<\/p>\n<figure id=\"attachment_4921388\" class=\"wp-caption alignnone\"><a href=\"https:\/\/img.theepochtimes.com\/assets\/uploads\/2022\/12\/13\/Maxine-Waters2-1200x801.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"lazy size-full wp-image-4921388\" src=\"https:\/\/www.theepochtimes.com\/assets\/themes\/eet\/images\/white.png\" data-src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/12\/Maxine-Waters2.jpg\" alt=\"Epoch Times Photo\" width=\"2356\" height=\"1572\"   style=\"display:none\"><figcaption class=\"wp-caption-text\"><noscript><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-4921388\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/12\/Maxine-Waters2.jpg\" alt=\"Epoch Times Photo\" width=\"2356\" height=\"1572\" \/><\/noscript><\/figcaption><\/a> House Financial Services Committee Chair Maxine Waters (D-Calif.) during a hearing in the Rayburn House Office Building on Capitol Hill on May 12, 2022 in Washington, D.C. (Chip Somodevilla\/Getty Images)<\/figure>\n<p>When asked by committee chair Maxine Waters (D-Calif.) about unsavory business practices, Ray stated plainly that the fundamental issue at FTX was the use of non-U.S. customer funds by Alameda Research for \u201cinvestments and other disbursements.\u201d<\/p>\n<p>Alameda engaged in derivatives trading in various cryptocurrencies, according to the acting CEO.<\/p>\n<p>When asked about whether Bankman-Fried was involved in the day-to-day business of Alameda Research\u2014the founder has previously <a href=\"https:\/\/fortune.com\/2022\/11\/30\/ftx-sam-bankman-fried-sbf-says-did-not-commit-fraud-distances-himself-alameda-research\/\">claimed<\/a> to have minimal involvement\u2014Ray responded that he did not know for sure but that Bankman-Fried owned 90 percent of Alameda. Ray added that, in regards to whether the two companies were governed separately, \u201cthere was no distinction whatsoever.\u201d<\/p>\n<p>On the topic of regulation, Ray kept it simple: \u201cYou need records, you need controls, and you need to segregate people\u2019s money.\u201d<\/p>\n<p>Rep. Ann Wagner (R-Mo.) asked the CEO about statements made by Bankman-Fried implying the accidental usage of FTX customer funds by Alameda.<\/p>\n<p>\u201cI don\u2019t find any such statements to be credible,\u201d Ray replied.<\/p>\n<p>Founded in 2019, FTX was one of the world\u2019s largest cryptocurrency exchanges. The firm was valued at $32 billion at its peak, while Bankman-Fried\u2019s\u00a0net worth was estimated to be $26 billion. He was the second-largest individual donor to the Democratic Party, donating about $40 million in the 2022 election. He also said he donated a similar amount to Republicans, but more quietly.<\/p>\n<p>Billions of dollars in customer funds remain missing amid numerous and credible <a href=\"https:\/\/www.theepochtimes.com\/the-fall-of-sam-bankman-fried-and-his-crypto-empire-a-timeline_4906642.html\">reports<\/a> that FTX misused client money for personal loans to senior staff and to finance risky investments through sister investment firm Alameda Research.\u00a0Ray acknowledged during the hearing that there may exist crypto wallets\u2014software used to hold and trade cryptocurrencies\u2014that his team is unaware of.<\/p>\n<p>The CEO revealed that at least $100 million in customer funds was released to Bahamas-based FTX clients, just before Ray and his team took over. The balance was distributed to 1,500 different accounts\u2014roughly $67,000 per account.<\/p>\n<h2>QuickBooks<\/h2>\n<p>Ray, who was responsible for the liquidation of failed energy company Enron, reiterated throughout the hearing that he\u2019s never encountered anything like FTX, at one point highlighting the company\u2019s use of QuickBooks. Lawmakers were surprised to hear this given the software is typically not used by international billion-dollar companies.<\/p>\n<p>\u201cNever in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,\u201d Ray <a href=\"https:\/\/www.scribd.com\/document\/608316524\/FTX-First-Day-Affidavit#download&#038;from_embed\">wrote<\/a> in a court filing in mid-November.<\/p>\n<p>Speaking at the hearing, Rep. Bill Huizenga (R-Mich.) summed up his thoughts on the collapse of Bankman-Fried\u2019s empire of influence: \u201cIt seems to me there\u2019s a lot more to uncover here. Certainly, Mr. Bankman-Fried has, let\u2019s say, wooed many in New York, Silicon Valley, around the world, and yes, certainly here in DC,\u201d the congressman said.<\/p>\n<p>\u201cEverybody loved the exciting idea of a politically progressive, smart entrepreneur who is going to reimagine capitalism and change the world, feeling better about themselves, all while making them gobs of money,\u201d Huizenga went on, referring to Bankman-Fried\u2019s political and philanthropic <a href=\"https:\/\/www.theepochtimes.com\/recipients-of-bankman-frieds-political-donations-should-return-money-legal-experts-say_4898386.html\">donations<\/a>.<\/p>\n<p>Ray claimed to be investigating the relationship between FTX and Bankman-Fried\u2019s politically connected parents. Bankman-Fried\u2019s mother, Barbara Fried,\u00a0<a href=\"https:\/\/www.vox.com\/platform\/amp\/recode\/2020\/1\/6\/21046631\/mind-the-gap-silicon-valley-democratic-donors-stanford\">founded<\/a> the \u201cMind the Gap\u201d progressive political group that funneled $20 million to Democrats in 2020.<\/p>\n<p>\u201cI\u2019m glad to see it\u2019s finally unraveled,\u201d Rep. Huizenga concluded.<\/p>\n<div class=\"author_wrapper\">\n<div class=\"one_author_block round\">\n<div class=\"top_row\">\n\t\t\t\t\t<a href=\"https:\/\/www.theepochtimes.com\/author-liam-cosgrove\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/11\/LiamCosgrove_WEB.jpg\" alt=\"Liam Cosgrove\" \/><\/a><\/p>\n<p>Follow<\/p>\n<\/div>\n<p>Liam Cosgrove works as a freelance journalist covering business, markets, and finance. He received his bachelor&#8217;s degree in mathematics from the University of California, Santa Barbara.<\/p>\n<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>New FTX CEO John Ray testified before the U.S. House Financial Services Committee on Tuesday.\u00a0This is the first hearing in the committee\u2019s public investigation into the collapse of the crypto<\/p>\n","protected":false},"author":1,"featured_media":1774509,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[547],"tags":[8151,5458,3850,8811,8813,7334,4543,4475,8812,3819],"class_list":["post-1774506","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-bongino-report","tag-accident","tag-bongino","tag-ceo","tag-client","tag-commingling","tag-ftx","tag-funds","tag-john","tag-ray","tag-report"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1774506","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1774506"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1774506\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1774509"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1774506"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1774506"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1774506"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}