Emoji for expenses, penthouses and slipshod accounting: The most damning details from new FTX CEO’s report

Published

3 years ago

November 18, 2022

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Earlier Thursday, FTX CEO John Ray III filed a declaration with the United States Bankruptcy Court for Delaware, the latest in the implosion of one of the world’s largest cryptocurrency exchanges.

Ray, who helped shepherd Enron through its own bankruptcy, minced no words about the state of the company or the behavior of the former executive team, describing it as one of the worst examples of corporate controls he’d ever encountered. It was a damning remark from someone who has 40 years of legal and restructuring experience.

Here are some of the most significant revelations from Ray’s filing:

1. A total lack of financial and corporate controls

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”

Ray opened his filing torching former management, including former CEO Sam Bankman-Fried, for the failure by leadership to catch and address a stunning, multibillion-dollar hole in the Alameda Research-FTX balance sheets. The losses for investors may reach as high as $8 billion. But with nonexistent or deficient accounting, auditing and disbursement systems, it will take Ray and his forensic investigators “some time” to uncover the truth.

2. Slipshod accounting will require forensic analysis.

“I do not believe it appropriate for stakeholders or the Court to rely on the audited financial statements as a reliable indication of the financial circumstances of these [companies].”

FTX’s new chief said he had “substantial” concerns about the financial positions he was presenting to the court. FTX’s implosion revealed a massive hole in the company balance sheets, but until blockchain analysis and forensic accounting are completed, Ray said it was not “appropriate for stakeholders or the Court to rely” on the numbers presented.

Accurate financials are a key metric for valuing and investing in a company. Venture capital firms poured billions into poster child Bankman-Fried and his companies, valuing them in the tens of billions of dollars.

A standard aspect of any venture capital investment is a due diligence period, where books are opened and audited financials are shown to prospective investors. Ray’s assertion that the financial statements for many of FTX’s subsidiaries are unreliable raises fresh questions about the diligence performed by some of the world’s biggest venture firms.

3. Penthouses, perks and personal items

“In the Bahamas, I understand that corporate funds of the FTX Group were used to purchase homes and other personal items for employees and advisors. I understand that there does not appear to be documentation for certain of these transactions as loans, and that certain real estate was recorded in the personal name of these employees and advisors on the records of the Bahamas.”

Other reports have detailed lavish perks allegedly given to FTX employees in the Bahamas. Ray’s filing indicated that corporate funds were used to purchase homes for employees and advisors, sometimes in their name. Loans were not recorded from FTX to those individuals — as is typical with similar arrangements at other companies. Instead, individuals were given the deeds to these properties, according to Ray, free and clear, in their own names.

Notably, Bankman-Fried’s $40 million penthouse briefly hit the market in the aftermath of the bankruptcy. It has since been removed from public listing.

4. Emoji for expenses

“The Debtors did not have the type of disbursement controls that I believe are appropriate for a business enterprise. For example, employees of the FTX Group submitted payment requests through an online ‘chat’ platform where a disparate group of supervisors approved disbursements by responding with personalized emojis.”

Despite an entire industry devoted to expense controls and reimbursements, Bankman-Fried’s team used internal messaging to release corporate funds into the hands of employees around the world. It isn’t immediately clear what platform FTX used, although the company is known to have used Slack for internal communications.

5. An advantage for Alameda

Unacceptable management practices included the use of an unsecured group email […] to access confidential private keys and critically sensitive data […] the absence of daily reconciliation of positions on the blockchain, the use of software to conceal the misuse of customer funds, the secret exemption of Alameda from certain aspects of FTX.com‘s auto-liquidation protocol, and the absence of independent governance […]”

Alameda Research, the secretive trading firm at the heart of Bankman-Fried’s empire, executed trades on FTX alongside other institutional and individual traders. The two firms were closer than publicly acknowledged, however, in light of Ray’s declaration that Alameda was secretly exempted from “certain aspects” of FTX’s auto-liquidation protocol.

It isn’t immediately clear what aspects Ray meant. In crypto trading, liquidation is most analogous to a margin call, where a levered position is closed out by an exchange due to a dramatic shift in an underlying asset’s price.

CNBC has made multiple requests for comment from Bankman-Fried.

Technology

Stablecoin issuer Circle applies for a national bank charter

Published

3 hours ago

June 30, 2025

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Stablecoin issuer Circle applies for a national bank charter

Traders work on the floor at the New York Stock Exchange (NYSE), on the day of Circle Internet Group’s IPO, in New York City, U.S., June 5, 2025.

Brendan McDermid | Reuters

Stablecoin issuer Circle Internet Group has applied for a national trust bank charter, moving forward on its mission to bring stablecoins into the traditional financial world after the firm’s big market debut this month, CNBC confirmed.

Shares rose 1% after hours.

If the Office of the Comptroller of the Currency grants the bank charter, Circle will establish the First National Digital Currency Bank, N.A. Under the charter, Circle, which issues the USDC stablecoin, will also be able to offer custody services in the future to institutional clients for assets, which could include representations of stocks and bonds on a blockchain network.

Reuters first reported on Circle’s bank charter application.

There are no plans to change the management of Circle’s USDC reserves, which are currently held with other major banks.

Anchorage Digital is the only other crypto company to obtain such a license.

Circle’s move comes after a wildly successful IPO and debut trading month on the public markets. Shares of the company are up 484% in June. The company is also benefiting from a wave of optimism after the Senate’s passage of the GENIUS Act, which would give the U.S. a regulatory framework for stablecoins.

Having a federally regulated trust charter would also help Circle meet requirements under the GENIUS Act.

“Establishing a national digital currency trust bank of this kind marks a significant milestone in our goal to build an internet financial system that is transparent, efficient and accessible,” Circle CEO Jeremy Allaire said in a statement shared with CNBC. “By applying for a national trust charter, Circle is taking proactive steps to further strengthen our USDC infrastructure.”

“Further, we will align with emerging U.S. regulation for the issuance and operation of dollar-denominated payment stablecoins, which we believe can enhance the reach and resilience of the U.S. dollar, and support the development of crucial, market neutral infrastructure for the world’s leading institutions to build on,” he said.

Don’t miss these cryptocurrency insights from CNBC Pro:

Technology

Meta shares hit all-time high as Mark Zuckerberg goes on AI hiring blitz

Published

6 hours ago

June 30, 2025

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Meta shares hit all-time high as Mark Zuckerberg goes on AI hiring blitz

Mark Zuckerberg, chief executive officer of Meta Platforms Inc., during the Meta Connect event on Wednesday, Sept. 25, 2024.

Bloomberg | Bloomberg | Getty Images

Meta shares hit a record high on Monday, underscoring investor interest in the company’s new AI superintelligence group.

The company’s shares reached $747.90 during midday trading, topping Meta’s previous stock market record in February when it began laying off the 5% of its workforce that it deemed “low performers.”

Meta joins Microsoft and Nvidia among tech megacaps that have reached new highs of late, all closing at records Monday. Apple, Amazon, Alphabet and Tesla remain below their all-time highs reached late last year or early this year.

Meta CEO Mark Zuckerberg has been on an AI hiring blitz amid fierce competition with rivals such as OpenAI and Google parent Alphabet. Earlier in June, Meta said it would hire Scale AI CEO Alexandr Wang and some of his colleagues as part of a $14.3 billion investment into the executive’s data labeling and annotation startup.

The social media company also hired Nat Friedman and his business partner, Daniel Gross, the chief of Safe Superintelligence, an AI startup with a valuation of $32 billion, CNBC reported on June 19. Meta’s attempts to buy Safe Superintelligence were rebuffed by the startup’s founder and AI expert Ilya Sutskever, the report noted.

Wang and Friedman are the leaders of Meta’s new Superintelligence Labs, tasked with overseeing the company’s artificial intelligence foundation models, projects and research, a person familiar with the matter told CNBC. The term superintelligence refers to technology that exceeds human capability.

Bloomberg News first reported about the new superintelligence unit.

Meta has also snatched AI researchers from OpenAI. Sam Altman, OpenAI’s CEO, said during a podcast that Meta was offering signing bonuses as high as $100 million.

Andrew Bosworth, Meta’s technology chief, spoke about the social media company’s AI hiring spree during a June 20 interview with CNBC’s “Closing Bell Overtime,” saying that the talent market is “really incredible and kind of unprecedented in my 20-year career as a technology executive.”

WATCH: Meta’s AI talent spending spree

Technology

Joby Aviation stock pops 12% after delivering first flying taxi to UAE

Published

7 hours ago

June 30, 2025

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Joby Aviation stock pops 12% after delivering first flying taxi to UAE

An electric air taxi by Joby Aviation flies near the Downtown Manhattan Heliport in Manhattan, New York City, U.S., November 12, 2023.

Roselle Chen | Reuters

Joby Aviation stock soared about 12% as the flying air taxi maker got closer to launching a service in the United Arab Emirates.

The electric vertical takeoff and landing, or eVTOL, company said Monday that it delivered its first aircraft to the UAE and has completed piloted flight tests as it readies for a 2026 launch in the region.

“Our flights and operational footprint in Dubai are a monumental step toward weaving air taxi services into the fabric of daily life worldwide,” said founder and CEO JoeBen Bevirt in a release. He called the Middle East nation a “launchpad for a global revolution in how we move.”

Joby’s planned launch in the UAE was announced in February 2024 as part of an agreement with Dubai’s Road and Transport Authority. The deal included exclusive rights to conduct air taxi service in Dubai for six years.