The new CEO of FTX has assembled an investigation team to trace and secure company assets.
Attorneys appearing for the exchange have admitted to poor management of the company.
The lawyers have acknowledged the exchange’s unreliable financial records and compromised systems.
FTX’s lawyers have outlined the misappropriation of funds for the purchase of millions of dollars worth of real estate.
Bahamas-based crypto exchange FTX saw its first bankruptcy hearing today. Lawyers from Sullivan Cromwell, the law firm representing the bankrupt crypto exchange, provided the judge with a detailed account of the mismanagement that took place at the bankrupt exchange.
The presiding judge started the proceedings by granting the debtor’s motion to seal documents related to information on the top 50 creditors. However, the judge stated that this approval was temporary and will likely be lifted very quickly.
FTX attorneys highlight SBF’s poor leadership
The lawyers appearing for Sam Bankman-Fried’s bankrupt exchange did not hold back while providing details about the substandard administration of what was once the world’s second-largest cryptocurrency exchange.
Adam Landis from Sullivan Cromwell referred to this case as a “different sort of animal”. Landis then proceeded to shed a light on the poor leadership of the former CEO in the run-up to the exchange’s bankruptcy, which resulted in “resignation throughout the ranks”. Additionally, the lawyers acknowledged the fact that the company had unreliable financial records and compromised systems which left the platform vulnerable to hacks.
There were substantial amounts of money spent on things that were not related to the business,” the attorney said.
The misappropriation of funds includes a real estate shopping spree by one of the entities associated with FTX. The firm reportedly spent $300 million to purchase residential properties and vacation homes in the Bahamas.
FTX’s lawyers also briefed the judge on the efforts by the exchange’s new management to track and secure the company’s assets. John Ray III, the new CEO and Chief Restructuring Officer has assembled a team of investigators which include former SEC Director of enforcement Steve Pecan and Jamie McDonald, former head of enforcement at CFTC. On-chain intelligence firm Chainalysis has also been roped in to aid the investigation.