Sam Bankman-Fried used FTX funds to buy personal items and homes in the Bahamas, court filing says

According to new FTX CEO John Ray III's statement of support for Chapter 11 proceedings on Thursday, Sam Bankman-Fried used FTX Group trading cash to purchase homes and businesses. other personal property for staff. and consultants.

"In the Bahamas, I understand that FTX Group Company funds have been used to purchase homes and other personal items for employees and advisors." Ray wrote in the statement.

"Never in my career have I seen such a complete failure of corporate controls and such a complete lack of reliable financial information as has happened here."

Also read: New FTX chief appalled by mismanagement of Crypto Exchange under Sam Bankman-Fried

Using company funds for personal expenses is not always prohibited. To do this in the United States, the following entities must either authorize it or not be defrauded by it:

Treasury Department (IRS, State Government, etc.) Business owners (shareholders, partners, LLC members, etc.) Creditors (creditors' rights usually arise in cases of fraud or bankruptcy)

FTX Group was registered in the Bahamas, a country where US tax authorities such as the IRS have no legal authority. Normally, the courts will carefully consider any authorization to use company funds for personal gain.

Also Read: FTX, Bahamas Regulator Fight Over Control Of Bankruptcy Procedures: WSJ

A well-known case involved Andrew Fastow, the CFO of Enron, who used his own company, LJM Cayman L.P., to charge Enron's management fees.

LJM Cayman L.P. siphoned millions of dollars out of Fastow's pocket, with Enron supposedly authorizing it, saying the arrangement did not "adversely affect the interests of Enron".

Ray was also in charge of the liquidation of Enron.

Ray further indicated that to be reimbursed for business expenses, FTX employees only need to submit the request via chat and a supervisor will immediately approve with a personalized emoji.

"Debtors lacked the kind of disbursement control that I believe is appropriate for a commercial enterprise," the restructuring veteran wrote.

"For example, FTX Group employees submitted payment requests via an online "chat" platform where a disparate group of supervisors approved disbursements by responding with custom emoji."

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