John Ray III: FTX Bankruptcy Was “Pure Hell”

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  • FTX CEO John Ray III has described the “pure hell” of his first 48 hours in charge of the company
  • Ray described the total absence company information, including basic things like bank accounts and personnel
  • He also described how hackers incessantly tried to break into FTX’s accounts

FTX CEO John Ray III has described how hackers incessantly tried to break into FTX’s accounts on the day the company went into bankruptcy, describing the time as “pure hell”. Ray, who took over after Sam Bankman-Fried stepped down in November, told the United States Bankruptcy Court for the District of Delaware yesterday that the hacks continued “virtually all night long” and described how security experts and liquidators raced to secure funds.

48 Hours of “Pure Hell”

Ray told the court that when he assumed leadership of FTX in November 2022 there was a lack of information on bank accounts, income, insurance, and personnel. This led to a rush to gather information, which was essential information needed by the court. At the same time hackers were persistently trying to steal funds from the exchange, leading to a crisis situation:

Your normal first-day petition is chaotic as sometimes can be. This was something that I have never experienced. Those hacks went on virtually all night long […] It was really 48 hours of what I can only describe as pure hell.

Of course, one hacker did manage to get through, stealing over $447 million in assets which should have been sent to cold wallets during this time.

In the session, Ray stated that he had no prior relationship with former executives at the exchange, including Caroline Ellison (Alameda Research CEO), Gary Wang (FTX co-founder), and Bankman-Fried or his parents, before he took control of the company. He added that anyone who held a control position under Bankman-Fried no longer had any power to make decisions for the company.

Trustee Wants Independent Examiner

Ray’s testimony occurred during a motion from the Office of the U.S. Trustee, which called for the appointment of an independent examiner to provide a public report on the bankruptcy proceedings for transparency. Despite Ray’s lack of connection to Bankman-Fried, Juliet Sarkessian from the U.S. Trustee’s office argued that the appointment of an examiner was still in the public’s best interest.

No decision was made on the appointment of an independent examiner, but Judge John Dorsey did allow lawyers from both sides to negotiate a mutually agreed solution to the issue.