As far as Chapter 11 First Day Pleadings go, the FTX filing is an entertaining read. I know this story isn’t everyone’s cup of tea and I know a lot of retail investors lost a ton of money… but it’s a massive scandal that touches some of the most powerful people on the planet, from Silicon Valley leftists to academia to the Washington, D.C. elite. As you read this document, remember that FTX CEO Sam Bankman-Fried was a D.C. darling. Regulators were poised to give FTX special status, an effective regulatory moat, that would have allowed FTX a virtual monopoly on cryptocurrency markets as a centralized exchange while driving decentralized finance projects offshore. And FTX was a media darling, too. The legacy press praised SBF and wrote puff piece after puff piece. Meanwhile, similar companies that didn’t play the liberal virtue signaling game had the New York Times trying to write hit pieces on them for not hiring enough minorities.
Highlights from the filing: None of FTX’s various companies ever had audits, they never had board meetings, there was no cash management system, no one knows who controlled access to cash, no one knows exactly who worked or still works for FTX, employees got cash disbursements approved via Slack emoji, several Bahama properties were purchased with corp money and there’s no records of the transactions, and root control of crypto funds was passed on unsecure email, which might explain how more than $400 million was hacked right after everything came crash down.
Here’s the filing: