John Ray, who took over as CEO of crypto exchange FTX, has described some of the chaotic experiences at the firm following the company declaring bankruptcy.
In testimony for FTX’s case in the United States Bankruptcy Court for the District of Delaware on Feb. 6, Ray said he and other professionals had “carefully” been conducting an investigation into FTX’s activities, due to the company having no physical office. The FTX CEO seemed to be pushing back against a motion to assign an independent examiner to the bankruptcy case, claiming that “inadvertent errors” could result in “hundreds of millions of dollars of value” being destroyed.
According to Ray, when he took control of FTX in November 2022, there was “not a single list of anything” related to bank accounts, income, insurance or personnel, causing a “massive scramble for information.” The FTX CEO said the same day he helped file a Chapter 11 bankruptcy petition, and there were multiple attempts to steal crypto, resulting in security experts and liquidators moving quickly to secure funds.
“Your normal first-day petition is chaotic as sometimes can be — this was something that I have never experienced,” said Ray. “Those hacks went on virtually all night long [...] It was really 48 hours of what I can only describe as pure hell.”
The FTX CEO claimed he had had no connection with former executives at the exchange, including Alameda Research CEO Caroline Ellison, FTX co-founder Gary Wang and former CEO Sam Bankman-Fried or his parents prior to taking control of the company. According to Ray, anyone “that was in a control position” under Bankman-Fried no longer had any authority to direct FTX company actions.
Ray’s testimony came amid a motion from the Office of the U.S. Trustee arguing the court should appoint an independent examiner who would release a public report providing transparency into the bankruptcy proceedings. Juliet Sarkessian, representing the U.S. Trustee’s office, suggested that, although Ray had no connection to Bankman-Fried prior to his taking over as CEO, the appointment of an examiner was still in the public interest.
Judge John Dorsey did not rule on whether to appoint an independent examiner during the Feb. 6 hearing and instead allowed lawyers on both sides to discuss a "consensual resolution" on the issue.
FTX’s bankruptcy proceedings are ongoing as debtors and interested parties will make motions over the firm’s assets, investigate the company, and release information potentially affecting Bankman-Fried’s criminal case. The legal team representing FTX debtors requested the issuance of subpoenas for information and documents from Bankman-Fried’s immediate family on Feb. 1.