New FTX CEO Testifies on Company Collapse

At a hearing before the House Financial Services Committee, FTX's new CEO John J. Ray III testified on the events leading up to the company's collapse.

In his testimony, Mr. Ray said that the investigation into what caused FTX to decline so quickly is still ongoing, but investigators have found that FTX's risk management and compliance controls were "in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people's money or assets."

He said that FTX had (i) commingled customer assets with assets from its affiliated hedge fund, Alameda Research, (ii) used client funds to engage in margin trading, (iii) purchased crypto companies that are now worth a fraction of the purchase price, (iv) made loans and other payments to firm insiders in excess of $1 billion and (v) invested in "inherently unsafe" crypto exchanges. Additionally, Mr. Ray said that FTX maintained virtually no records or financial statements.

Mr. Ray said that he will continue to be transparent and coordinate with the Committee as he works to mitigate the harm suffered by customers and creditors.

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