John Ray III, the FTX crypto bankruptcy liquidator looking for where the money is

John Ray III has a reputation as a bulldog.

He has been plugging the financial holes of bankrupt companies for decades.

He has faced banks, millionaire businessmen and anyone else necessary for creditors to recover part of the money lent to insolvent companies.

At 63 years old, he has been commissioned to lead FTX, the cryptocurrency market whose collapse has been as spectacular as his rise.

But the bulldog has a problem: he still doesn't know where to bite.

The lawyer has presented his credentials, and his more than 40 years of experience, to the court handling the bankruptcy of FTX: “I have been director of restructuring or general manager in several of the largest corporate bankruptcies in history.

I have overseen situations involving allegations of criminal activity and embezzlement (Enron).

I have overseen situations involving novel financial structures (Enron and Residential Capital) and cross-border asset recovery and maximization (Nortel and Overseas Shipholding).”

With that track record, he will follow the trail of lost money from FTX in exchange for a fixed $200,000 plus a fee of €1,300 per hour.

The challenge, however, is more difficult than he could imagine: "Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial information as what has occurred here," he told the court. .

And he added: "The concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, [...] is unprecedented."

More information

Cryptocurrency platform FTX files for bankruptcy and threatens to cause a contagion effect

John Ray III is the son of an industrial plumber who worked for General Electric and was a plumbing and gas inspector in the city of Pittsfield (Massachusetts), where the now head of FTX grew up and attended high school.

He studied at the University of Massachusetts Amherst, where he graduated cum laude in Political Science in 1980. He was a fellow in the office of Democratic Senator Ted Kennedy and politics came to tempt him, but he decided to study law at Drake University in Des Moines (Iowa).

He was number two in his class of 178 students.

The FTX liquidator began his career at an accounting firm in Omaha, Nebraska.

In the 1980s he made the leap into the business world, first as Secretary of Waste Management in Orange, California, and then in what would be his first experience in the world of bankruptcy.

He arrived as head of Fruit of the Loom, which was going through a crisis due to excess debt.

He filed for default, sued the former chairman and agreed to sell the assets to Warren Buffett's investment firm Berkshire Hathaway, which remains his largest shareholder.

After that experience, he immersed himself in the world of bankruptcy and restructuring.

He participated in several before what would be his great opportunity: Enron.

The bankruptcy of the Texas electricity giant was one of the biggest scandals in US business history.

John Ray III took over as CEO of the liquidating firm from 2004 to 2009, where he had to untangle a skein of financial contracts and sell valuable assets.

With no ties to Wall Street, he sued the banks, which he considered jointly responsible for the fall of the electricity company.

He ended up reaching agreements with all of them and managed to recover some 22,000 million dollars, so that the company's creditors ended up rescuing 53% of his money, triple the 17% set as the initial goal.

He also took charge of the Canadian technology Nortel, victim of the financial crisis, or the mortgage firm Residential Capital, always with the maxim of recovering as much money as possible for creditors.

He currently runs his own restructuring firm, Owl Hill Advisory.

At FTX, John Ray III has found that he does not know how much money the group has, what its debts are or who the employees are, a firm without reliable accounts, in which disbursements were approved in chats using emoticons, without security measures , without control of their digital assets, without registration or documentation of their assets and investments and with suspicious unidentified outflows of money.

Its founder and main shareholder, Sam Bankman-Fried, has gone to the Bahamas, where the liquidator believes FTX has used group funds to buy houses and other personal items for employees and advisers.

The liquidator's brief before the court is an anthology of corporate nonsense by Bankman-Fried and his partners, who are suspected of using their clients' funds to carry out high-risk operations, using as collateral the digital assets they had in their market.

It is estimated that there may be about 100,000 affected and FTX's balance was around 10,000 million dollars.

But John Ray III is smart, patient and stubborn.

He has started to draw the map of the company;

he has hired cybersecurity experts, legal and financial advisers, and has begun to smell the scent of fraud.

If his track record is any precedent, he won't give up until he gets every last dollar he can afford.

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