FTX, one of the biggest crypto exchanges, recently faced bankruptcy due to lack of full corporate control. Sam Bankman Fried, the founder and former CEO of the exchange, was arrested today in the Bahamas. So, today at 10:00 AM ET/8:30 PM IST, there is a live congressional hearing on the FTX failure, which will answer many questions. Since Sam was arrested, current FTX CEO John J. Ray III will be present at the hearing.
This is a live article, and we will continue to add updates with timestamps.
10:34 AM ET: Ms Waters questions John Ray
Mrs. Waters says. “Sam Bankman Fried seems to have tried to hide the connection between the exchange and the mutual fund. Have you seen evidence of such a cover-up? Have you seen evidence of independent management separate from Alameda and separate from the exchange?”
John answered. “The operations of the FTX Group were not divided; in fact, it operated as one company. As a result, there is no difference between the operation of the company and the one who controlled those operations.
Mrs. Waters says. “Well, another bankruptcy filing by Mr. Ray revealed that Mr. Bankman was personally exempt from a $1 billion loan from Alameda Research. In a meeting with committee staff, Mr. Banman said he was unable to say for sure who approved the loan because he did not know the details of the interest payments he had released. He said he invested this money back into the exchange but knowingly chose to take out the loan. To avoid directly associating Alameda Research with FTX, you should take it instead of FTX. Can you elaborate on the significant findings related to this loan?
John answered. “The loans that were given and released to Mr. were not just one loan but many loans. Some are registered with private promissory notes. For example, there is no description of the purpose of the loan, he signed as both the lender and the borrower. We do not currently have information on the purpose and use of those funds; This is part of the investigation.
Mrs. Waters asks “Have you found any business or practice that you believe to be inappropriate or harmful to FTX? If so, can you give us an example?
John says so. “Thank you indeed. You know, Alameda’s practice is based on the way it works for the client’s money. That is the main downfall of the transaction from ftx.com.”
10:26 AM ET: John Ray’s testimony
As John began to dig into what was wrong with FTX, it became clear to him that Chapter 11 was the best course to preserve any remaining value of FTX. So, my first job as CEO allowed Chapter 11 filings.
It also says: “The failure of FTX groups appears to have resulted from absolute control in the hands of a few inexperienced and unsophisticated individuals who did not have any systems or controls necessary for the company entrusted with other people’s money or property. He said.
Some of the accepted management practices include using computer infrastructure to provide individuals and senior management with access to systems that store client assets outside of security controls to prevent asset diversion. The private keys are worth hundreds of millions of dollars in crypto assets stored without effective security controls and encryption.
10:23 AM ET: Failure of SEC regulations
Mr. McHenry says: “I look forward to hearing from Mr. Gensler soon and often. And we’ll hear from him about how we can bring clarity to the application of securities laws to business platforms that he hasn’t.
10:13 AM ET: The court is live!
The Chairman, Ms. Waters, welcomed Mr. John, CEO of FTX. She also said today’s hearing will delve into Mr. Ray’s findings, the hosts piecing together the events that led to FTX’s collapse and the damage it caused to millions of customers who trusted the platform.
They also note FTX’s deep ties to Alameda. A crypto hedge fund that was primarily owned by the bank and misappropriated billions of dollars in client assets.
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