Excerpts from congressional testimony by FTX's new CEO

原文来源： Azuma，ODAILY星球日报

Us local time on December 13, the US House of Representatives Financial Services Committee will hold a meeting on FTX  A hearing on the matter, FTX's new CEO. John Ray III is scheduled to testify.

inTestimony released in advanceIn addition to the basic introduction of the current leadership team and the content of the vote to the regulators, Ray mainly detailed. The eight failings of FTX's previous management,It describes five of the team's current goals and challenges, details are as follows:

Eight Big Mistakes

1. There is a defect in system management. Senior management can access the storage system of customer assets, and there is no proper security mechanism to prevent them from transferring these assets.

2. Asset management was flawed, and the private keys that stored hundreds of millions of dollars of encrypted assets were not effectively secured or encrypted.

3. Alameda may lend funds from FTX.com for trading without any effective restrictions.

4. Assets are confused.

5. FTX lacks full trading documentation for nearly 500 investments.

6. There are no reliable audited financial statements.

7. Lack of dedicated finance and risk management staff, which is almost standard in any company near FTX size.

8. The subsidiaries of the whole FTX Group lack independent management.

With respect to count eight, Ray's testimony focused on that. FTX US, noting that FTX US also does not operate independently of FTX.com as described by SBF.

Five Goals

1.  The first objective is to bring the situation under control as quickly as possible, and that is already well under way. This effort has focused on building accounting, auditing, cash management, cybersecurity, human resources, risk management and other systems that were inadequate or nonexistent before my appointment.

2. The second objective is asset protection and recovery, which is the most important. We are working around the clock to track and secure assets, but a significant portion of which may have gone missing, been misappropriated, or are difficult to trace due to a lack of proper records. We are working with Nardello & Company, Chainalysis, BitGo, Alvarez & Marsal worked with cybersecurity companies on these recoveries. So far, we've secured more than $1 billion in digital money.

3. The third objective is transparency investigations. We are working with Sullivan & Cromwell's cybersecurity team has collaborated on this process, and they're gathering evidence to help us understand what caused the crash.

4. The importance of the fourth objective is efficiency and coordination, which requires cooperation and coordination with the insolvency proceedings of subsidiaries in other jurisdictions.

5. The ultimate objective is to maximise value for all stakeholders through the eventual restructuring or sale of FTX Group's complex businesses, investments, digital assets and physical properties.

Five Difficulties

FTX.com's client assets are mixed with those of Alameda's trading platform.

Alameda used client funds to engage in leveraged trading, resulting in huge losses of client funds.

FTX went on a spending spree in late 2021 and 2022, spending about $5 billion on acquisitions or investments during that period, many of which have fallen sharply in value.

Loans and other payments to insiders exceeded $1 billion.

Alameda's business model as a market maker requires the deployment of funds to various third-party exchanges, which are inherently insecure and further exacerbated by the protections offered by certain overseas jurisdictions.

Source of original article

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