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FTX Lawyers Admit Corporate Mismanagement in First Bankruptcy Hearing

  • FTX’s new CEO has assembled an investigative team to track down and protect company assets.
  • Lawyers appearing in court admitted company mismanagement.
  • Lawyers admitted the exchange’s financial records were unreliable and systems were compromised.
  • Lawyers for FTX outline circumstances in which funds were misappropriated to buy real estate worth millions of dollars.

Bahamas-based cryptocurrency exchange FTX held its first bankruptcy hearing today. Lawyers for the law firm Sullivan Cromwell, which represented the bankrupt cryptocurrency exchange, detailed to the judge the mismanagement of the bankrupt exchange.

The presiding judge approved the debtor’s motion to seal up documents related to information on the top 50 creditors, and the proceedings began. However, the judge said such approval was temporary and likely to be revoked soon.

FTX lawyers highlight SBF’s poor leadership

Lawyers appearing for Sam Bankman-Fried’s bankruptcy exchange are offering details about the substandard management of what was once the world’s second-largest cryptocurrency No flinching when swapping.

Adam Landis from Sullivan Cromwell called the case “a different kind of animal”. Landis went on to reveal that the previous CEO’s ineffective leadership leading up to the exchange’s bankruptcy led to the “full resignation.” Additionally, the lawyers acknowledged that the company had unreliable financial records and compromised systems, making the platform vulnerable to hacking.

There is a lot of money being spent on things that have nothing to do with the business,” the lawyer said.

Misappropriation of funds included a real estate spree by one of the entities associated with FTX. Reportedly, the company spent $300 million to buy residential properties and vacation homes in the Bahamas.

FTX’s lawyers also briefed the judge on how the exchange’s new management is trying to track and protect company assets Efforts made. New CEO and Chief Restructuring Officer John Ray III assembled an investigative team that included former SEC enforcement chief Steve Pecan and former CFTC enforcement chief Jamie McDonald. On-chain intelligence firm Chainalysis was also asked to assist in the investigation.

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