New FTX CEO John Ray to Testify Before Congress

The logo of FTX at the entrance of the FTX Arena in Miami on Nov. 12, 2022. Marco Bello/Reuters

New FTX CEO John Ray is scheduled to testify before the U.S. House Financial Services Committee on Dec. 13. FTX founder Sam Bankman-Fried was also scheduled testify remotely from the Bahamas, but this remains uncertain now that he has been detained by Bahamian law enforcement. This comes after a U.S. court shared a sealed indictment with the authorities of the island nation.

FTX filed for U.S. bankruptcy protection on Nov. 11, and Bankman-Fried resigned as CEO on the same day.

Ray replaced Bankman-Fried as chief executive to oversee the bankruptcy proceedings and locate missing funds. Ray, who was responsible for the liquidation of failed energy company Enron, said he’s never encountered anything like FTX.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray wrote in a court filing in mid-November.

In his prepared remarks for the Dec. 13 hearing, Ray included “the commingling of assets” in his list of “unacceptable management practices at the FTX Group.” He also confirmed what many media outlets have reported, namely that FTX customer funds were funneled to Alameda to finance the latter company’s trading schemes.

Ray accused former FTX executives of embarking on a “spending binge” of more than $6 billion, more than $1 billion of which went to FTX “insiders” in the form of personal loans or direct payments.

The acting CEO noted that he and his team are employing “painstaking forensic efforts” to locate the company’s missing assets.

Founded in 2019, FTX was one of the world’s largest cryptocurrency exchanges. The firm was valued at $32 billion at its peak, while his net worth was estimated to be $26 billion. He was the second-largest individual donor to the Democratic Party, donating about $40 million in the 2022 election.

Billions of dollars in customer funds remain missing amid numerous credible reports that FTX misused client money for personal loans to senior staff and to finance risky investments through sister investment firm Alameda Research.