2023-04-11 21:29:39
A damning FTX report
FTX's new management has released a blistering new report that delves into the failures leading up to the exchange's bankruptcy. Here are just some of the takeaways.
1. "Hubris, incompetence and greed" are cited as some of the root causes that led to FTX collapsing as swiftly as it had grown.
2. Sam Bankman-Fried, Gary Wang and Nishad Singh controlled almost every aspect of FTX — despite the fact they were fresh out of college and had little experience in risk management and running a business.
3. One executive stated that "if Nishad got hit by a bus, the whole company would be done" — highlighting the concentration of power.
4. Other executives who tried to raise concerns saw their bonuses slashed — and were ordered to apologize to SBF but refused to do so.
5. QuickBooks was used for much of FTX's record-keeping, meaning that it was impossible for the exchange to keep accurate financial records.
6. In internal messages, SBF described Alameda Research as "unauditable," writing: "We sometimes find $50 million of assets lying around that we lost track of; such is life."
7. Expenses and invoices were regularly submitted on Slack — and were approved using emojis. That's right, emojis!
8. Neither Singh nor Wang had the training or experience to handle FTX's cybersecurity needs — and the company didn't have a chief information security officer or anyone with the skills to fulfill the responsibilities of such a role.
9. Virtually all cryptoassets were kept in hot wallets connected to the internet, meaning they were "far more susceptible to hacking, theft, misappropriation and inadvertent loss." Indeed, we saw a hack take place on the day of the bankruptcy.
10. And further illustrating the haphazard way in which crypto was stored, hundreds of millions of dollars worth of crypto recovered was not reflected in any of FTX's record-keeping systems.
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