“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial information as occurred in this case.” The statement of the new president of FTX, elected in the framework of the bankruptcy, becomes more relevant if we look at the past of John J. Ray III. This lawyer was the one who led the bankruptcy of Enron, an energy services company in which an accounting fraud was discovered in 2001 (it inflated income) that led to the bankruptcy of the company and dragged the auditor Arthur Andersen, having as executive president the energy company. Jeffrey Keith Skilling was sentenced to a prison term, first for a term of 24 years, sentence shortened on appeal, finally released (in 2019) after 12 years. To lead, then, the bankruptcy of Enron, John J. Ray III was chosen, who now assumes the direction of FTX.
The cryptocurrency platform, founded by Sam Bankman-Fried, entered bankruptcy on November 11, and now the magnitude of the fall is beginning to be known, pointing the finger at the young former millionaire.
The comparison with the Enron case thus became more visible. In an analysis by the Bernstein bank, its analysts assume that the case for “FTX is closer to Enron than Lehman”. John J. Ray III says it’s worse, pointing to systems whose integrity was compromised, including failures in supervision outside the United States, but also, according to the bankruptcy proceeding, “the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised”, leading to an “unprecedented situation”.
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Source: Observadora
