Latest FTX Report Shows How Bad Things Really Were

The latest FTX report revealed shocking details about the inner workings of the failed crypto exchange.

Sam Bankman-Fried stands with his arms crossed wearing a mask. From his covered mouth is a speech bubble depicting several emojis: handshake, see no evil, Bahamas flag, island, house
  • FTX report unveils more details about Sam Bankman-Fried’s hold on the exchange. 
  • The report highlights the causes of the collapse, as well as the incompetence of FTX management. 
  • FTX CEO John Ray’s scathing remarks echo throughout the report.

Failed crypto exchange FTX once presented itself as a model player in the industry. Its bankruptcy, and the investigation of its founder Sam Bankman-Fried, revealed that it was a mirage. Now, a new document shows just how bad things really were. 

The latest report released by FTX debtors has revealed shocking details about the company’s inner workings. The report highlights a “hubris, incompetence, and greed” culture on an “unprecedented scale.” 

According to the report, FTX lacked even the most fundamental financial and accounting controls. At the same time, the exchange and its founder Sam Bankman-Fried quashed all dissent within the organization. 

Sam Bankman-Fried’s Iron Grip

At the heart of the collapse were Bankman-Fried and his closest associates. These include Nishad Singh and Gary Wang, former top executives at the company. 


The report alleges that the trio showed little interest in instituting an appropriate oversight or control framework. Instead, they tightly controlled the FTX Group, quashing any challenge to their authority. 

“These individuals stifled dissent, commingled and misused corporate and customer funds, lied to third parties about their business, joked internally about their tendency to lose track of millions of dollars in assets, and thereby caused the FTX Group to collapse as swiftly as it had grown,” the report says. 

Lack of Record-Keeping

One of the main issues highlighted in the report is the lack of documentation and record-keeping within the FTX Group. 


Important treasury reports were either missing or not prepared regularly,” the report notes. Copies of key documentation, such as executed loan agreements and bank statements, were “incomplete, inaccurate, contradictory, or missing entirely.” 

“FTX Group did not maintain reliable lists of bank or trading accounts, cryptocurrency wallets, or authorized signatories,” the report noted. This made it particularly difficult to trace funds and transactions. 

To circumvent these limitations, “the Debtors have had to construct this historical data from scratch.” They also had to “make sense of the numerous resulting discrepancies, anomalies, and undocumented positions.” 

Alameda’s ‘Extraordinary Privileges’ at FTX

FTX trading arm Alameda Research had “‘extraordinary privileges” on FTX, the report wrote. This ultimately led to the collapse of both FTX and Alameda. 

For one, Alameda had “effectively limitless ability to trade and withdraw assets from the exchange.”

The trading firm could trade with all the funds it wanted, regardless of how much it had in its account balance. Moreover, FTX also exempted Alameda “from the auto-liquidation process that applied to other customers.” 

These findings contrasted with public claims by the FTX Group, claiming that FTX treated Alameda like any other client. 

This unlimited ability to borrow money and trade ultimately led to the collapse of FTX. Alameda Research made a series of bad trades, which ordinarily would have bankrupted just the trading firm. However, its access to FTX funds meant it could double down, taking the entire FTX Group with it. 

John Ray III: Report Will Give Transparency to Creditors 

FTX’s new CEO, John J. Ray III, says he released the report in the spirit of transparency he promised at the start of the Chapter 11 process. His scathing remarks echo throughout the report. 

“Group’s failure is novel in the unprecedented scale of harm it caused in a nascent industry,” the report wrote. Yet, “many of its root causes are familiar: hubris, incompetence, and greed.” 

Ray, who was also the CEO of Enron after its bankruptcy, is in charge of restructuring FTX. His job is to recover as much money as possible for FTX users and creditors. 

Despite his best efforts, users that had deposits with FTX will still likely receive just pennies on the dollar. An earlier report by the new FTX leadership showed that some $8.9 billion in customer funds are missing from the exchange. 

Bankman-Fried faces fraud and money laundering charges in the US for his role in the FTX collapse. The former billionaire pled not guilty to the charges. 

Multiple SBF associates, including executives Singh and Wang, pled guilty, as did former Alameda Research CEO Caroline Ellison. They are currently cooperating with the government’s investigation. 

On the Flipside

  • Lack of record-keeping and corporate controls enabled the FTX insiders to keep the charade going as long as it did. Proper corporate rules would have revealed issues much earlier. 
  • The report highlights the need for transparency in crypto exchanges and crypto companies. Proper corporate controls and reporting would have limited what SBF and other executives could do with user funds. 

Why You Should Care

The report shows how bad the management of a billion-dollar company like FTX can be. These facts should make investors reassess who they entrust with their money. 

Read more revelations about the corruption and mismanagement in FTX:

Sam Bankman-Fried and Insiders Took $3.2M from FTX

Read about how Binance’s recent troubles with US authorities affect its business in the US.: 

Binance Faces Banking Troubles as Banks Stay Clear

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

David Marsanic

David Marsanic is a journalist for DailyCoin who covers the intersection of crypto, traditional finance, and government. He focuses on institutionalized crypto entities like major cryptocurrency exchanges and Solana, breaking down complex topics into easy-to-understand writing. David's prior experience as a business journalist at various crypto and traditional news sites has enabled him to maintain a critical approach to news while adhering to high journalistic integrity standards.