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- FTX employees claimed expenses through chat messages, its new CEO said.
- Random managers would then approve the official claims by using personalized emojis, John Ray added.
- In his damning report, Ray said FTX failed to keep communication, hiring, and financial records.
Employees of crypto exchange FTX would file expense claims through chat messages, and random managers would approve the claims by responding with emojis, the firm's new CEO said in court filings.
New CEO John Ray said FTX employees submitted payment requests to a "disparate group of supervisors," who would approve expenses "by responding with personalized emojis," FTX's Thursday bankruptcy filing shows.
"The Debtors did not have the type of disbursement controls that I believe are appropriate for a business enterprise," Ray said.
Ray, a lawyer who also oversaw the bankruptcy of energy giant Enron, was called in to lead FTX's restructuring. The exchange filed for bankruptcy on November 11.
"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 said.
He blasted FTX executives and former CEO Sam Bankman-Fried, saying they also failed to keep records of their communications when they made decisions, among a litany of other mismanagement allegations.
"One of the most pervasive failures of the FTX.com business in particular is the absence of lasting records of decision-making," Ray said, per the filing. "Mr Bankman-Fried often communicated by using applications that were set to auto-delete after a short period of time."
He added that Bankman-Fried would encourage employees to use the same chat software.
Ray said FTX "never had board meetings" and that the exchange used employees' personal names to purchase real estate in the Bahamas with corporate funds.
He also said FTX did not keep proper records of who it hired. "Repeated attempts to locate certain presumed employees to confirm their status have been unsuccessful to date," he said, implying that some of these workers may have never existed.
Ray slammed Bankman-Fried in particular, saying that the exchange's cofounder "continues to make erratic and misleading public statements." He highlighted a Vox report that alleged Bankman-Fried sent a DM to reporter Kelsey Piper saying "fuck regulators," and that "they make everything worse."
Bankman-Fried stepped down on November 11, the same day that FTX filed for bankruptcy. His trading firm, Alameda Research, and around 130 affiliated companies have started bankruptcy proceedings.
Before FTX's blow-up, rival crypto exchange Binance was set to acquire the firm. But it backed out, citing findings during the due diligence process and concerns of federal probes into FTX.
FTX and Bankman-Fried did not immediately respond to Insider's requests for comment.
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