Sam Bankman-Fried talks his head and neck: The depths of the disaster

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"They don't protect customers at all":

lets out frustration in a Vox interview and rails against the US supervisory authorities, later he puts his statements into perspective

Photo: SAUL LOEB / AFP

Not for nothing did

(63) get the nickname "Pitbull".

The lawyer from Chicago is a restructuring expert - he cleans up what is left of collapsed companies.

He became famous in the course of the clean-up work after the collapse of Enron, when he had to use the leftovers.

So Ray has seen quite a bit in his career before he was appointed as the new CEO of crypto trading exchange FTX.

But the extent of the chaos seems to exceed everything.

"Never in my career have I seen such a complete failure of corporate controls and a complete lack of trustworthy financial information as in this case," Ray said.

A week ago he replaced founder and previous CEO

(30) at FTX after the company filed for bankruptcy.

The newcomer now painted a shocking picture, spoke of "compromised system integrity", criticized the lack of controls and the concentration of power "in the hands of a very small group of inexperienced, inexperienced and potentially vulnerable people".

His verdict: "This situation is unprecedented."

The fall of FTX and the crash of the crypto world's long-acclaimed golden boy has sent a tremor across the industry.

The collapse of the crypto exchange founded and managed by Bankman-Fried, in short: SBF, is causing more and more market participants and investors to get into trouble.

Only on Wednesday did the crypto broker and lender Genesis declare that it would no longer grant new loans in order to secure its own liquidity and would temporarily stop repayments.

Genesis itself is a key player in the industry, linked to many other platforms such as Gemini.

Last year, the company had issued more than $130 billion in crypto lending.

It reported a total of $2.8 billion in active loans at the end of the third quarter of 2022.

The anxious question now is: Which chain reactions will the FTX disaster trigger?

, head of distribution at Hong Kong digital exchange OSL, believes that the waves of the FTX bust will primarily hit less well-capitalized cryptocurrency players who also haven't diversified their assets sufficiently.

"The crypto ecosystem is intertwined in a way that will lead to more contagion in the near future. The risk of contagion in cryptocurrencies continues to rise," Reuters quoted crypto expert

of brokerage Clear Street as saying.

FTX's backers have already given up hope of seeing their capital back anyway.

's Vision Fund

and the respected risk investor Sequoia Capital - had already completely devalued their shares days ago.

Now Temasek followed suit.

The holding company of the city-state of Singapore and one of the leading FTX investors announced on Thursday that it would also set its stake of $275 million in FTX to zero, according to the Financial Times.

Corporate funds for personal luxury

In addition to the economic damage, the collapse also affects the reputation of the donors.

After the last round of financing, FTX was still valued at $32 billion - but apparently there had been no real audit.

Otherwise, the inadequacies that new CEO Ray encountered in his first week should have been apparent.

For example, Ray found that many of the more than 130 companies in the FTX Group, particularly those in Antigua and the Bahamas, lacked adequate corporate governance and many had never held a board meeting.

The group also had treasury procedural deficiencies, including the lack of an accurate list of bank accounts and authorized signatories.

Ray was also irritated by the use of company funds to pay for houses and other things for employees.

"As far as I know, FTX Group company funds have been used in the Bahamas to purchase houses and other personal effects for employees and consultants. As far as I know, there appears to be no loan documentation for some of these transactions and certain properties have been included in the records of the Bahamas in the personal names of those employees and consultants," he said.

Worst of all, so far, debtors have found and secured "only a fraction" of the group's digital assets they were hoping for, Ray said.

These included around $740 million in cryptocurrencies in so-called cold wallets;

these are ways to keep cryptocurrency tokens offline.

US Treasury Secretary Yellen calls for stricter oversight

Politics in the USA has long since been startled.

Democratic Treasury Committee Chair

, 84, and senior Republican Rep.

, 47, announced a bipartisan hearing on the FTX bankruptcy on Wednesday, CNBC reports.

They urged US banking regulators to tighten oversight of the crypto industry.

McHenry will most likely lead the Finance Committee going forward.

Treasury Secretary

(76) stated that more effective oversight of crypto markets is needed to address the risks.

Without naming FTX specifically, the minister called on Congress to act quickly.

In an interview distributed by Vox, founder Bankman-Fried himself regretted that he had even filed for Chapter 11 bankruptcy and at the same time criticized the regulatory authorities.

His "biggest mistake" was "Chapter 11".

"If I hadn't done that, in a month withdrawals could start and customers would be fully compensated," he claimed.

In the written interview via Twitter direct messages, he bluntly wrote: The "F--- regulators" made things worse.

Most supervisors are "overwhelmed".

"They don't protect customers at all."

more on the subject

• Insolvent crypto exchange: FTX founder Bankman-Fried denies "secret transaction" and alleged escape

• FTX Bust: The Crash of the Crypto Golden BoyBy Lukas Heiny

• Insolvent Crypto Exchange: At Least $1 Billion in Customer Funds at FTX Disappeared

He later tried to distance himself, stressing on Twitter that the statements were "not intended for the public".

He formulated some things "imprudently or excessively strongly".

The Vox platform, on the other hand, said: All communication was public.

The reporter clearly identified herself to Bankman-Fried on Twitter and also informed him by email that she wanted to write about the exchange on the medium.

In his reply, Bankman-Fried "raised no objection".

Meanwhile, John Ray, the new pit bull at the helm, tried to avert even greater damage.

"Sam Bankman-Fried has no ongoing role at FTX, FTX US or Alameda Research and does not speak on their behalf," he commented.

rei/lhy