Sam Bankman-Fried’s crypto exchange FTX didn’t have an in-house accounting department, according to a Chapter 11 bankruptcy filing.
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FTX didn’t have an in-house accounting department, according to a recent bankruptcy filing.
The group is now struggling to obtain accurate financial statements, new CEO John Ray III said.
FTX’s accounts were audited by a firm that claims to be the first certified accountant to open an office in the metaverse.
Sam Bankman-Fried’s bankrupt crypto exchange FTX didn’t have its own accounting department and its financial statements cannot be relied on, according to a bankruptcy court filing released on Thursday.
John Ray III said that FTX’s lack of an in-house accounting team meant that it was now struggling to provide him with reliable financial statements as he oversees the group’s restructuring as its new chief executive.
“The debtors are locating and securing all available materials but expect it will be some time before reliable historical financial statements can be prepared for the FTX Group with which I am comfortable as Chief Executive Officer,” he said. “The debtors do not have an accounting department and outsource this function.”
FTX.com and FTX Trading, which Ray refers to in Thursday’s bankruptcy filing as the group’s “Dotcom silo”, had their financial statements audited by the Certified Public Accountant Prager Metis.
Ray said he hadn’t previously heard of Prager Metis – but noted that they claimed in January to be the first-ever CPA firm to open an office in the metaverse through a partnership with the Decentraland platform.
“The audit firm for the Dotcom Silo was Prager Metis, a firm with which I am not familiar and whose website indicates that they are ‘the first-ever CPA firm to open its Metaverse headquarters in the metaverse platform Decentraland’,” he wrote.
Ray also slammed the audited financial statements he has received so far, saying they would be unlikely to prove reliable if FTX’s bankruptcy case reaches court.
“I have substantial concerns as to the information presented in these audited financial statements, especially with respect to the Dotcom Silo,” he said. “As a practical matter, 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 Silos.”
Ray – who was responsible for restructuring Enron after it filed for bankruptcy in 2001 – said he’d never seen “such a complete absence of trustworthy financial information” in the opening pages of FTX’s bankruptcy filing.
FTX and Prager Metis did not immediately respond to Insider’s requests for comment.