FTX’s logo is seen on a flag at the entrance to FTX Arena in Miami, Florida on November 12, 2022.
Marco Bello | Reuters
Company funds were used to buy homes in the Bahamas and “personal items” on behalf of FTX employees and advisors, according to a bankruptcy statement days after founder Sam Bankman-Fried’s penthouse apartment sold for nearly $40 million was listed.
It’s not immediately clear where these corporate funds came from.
In a statement to the court, newly appointed FTX CEO John Ray III said a lack of payout controls resulted in expenses being accounted for in a way that was “unfair for a company.”
Corporate housing is not uncommon, particularly in high-price areas, but Ray’s filing notes that “certain properties were registered in the personal names of these employees and consultants,” an atypical arrangement.
A penthouse home in the same private complex where Bankman-Fried and other FTX executives lived was listed for just under $40 million a few days ago. It was widely reported that the penthouse belonged to the former billionaire and FTX founder.
In the same filing, Ray chided the former executive’s team for a “complete lack of financial controls” and said he had no confidence in the financial statements of FTX companies.
The audit for one of FTX’s corporate verticals — what Ray called “silos” — was conducted by Prager Metis, a firm “I’m not familiar with,” Ray wrote.
Bankman-Fried could not immediately be reached for comment. Prague Metis did not immediately respond to a request for comment.
Ray, who oversaw Enron’s bankruptcy proceedings and restructuring, said he has 40 years of bankruptcy and corporate experience.
“The debtors do not have an accounting department,” Ray wrote, noting that he expects it to take “some time” to produce reliable financial statements.
FTX and affiliated companies, including Bankman-Fried’s crypto trading company Alameda Research, filed for Chapter 11 bankruptcy protection earlier this month.