FTX's new CEO tells bankruptcy court independent investigation would be a waste of money

John Ray said he didn't use investigations into Enron or Residential Capital.

February 6, 2023, 1:26 PM

FTX's new chief executive told a bankruptcy court Monday there is "a danger" to authorizing an independent investigation of the crypto exchange's collapse.

John Ray said he had no use for prior court-supervised investigations into other companies he steered through bankruptcy.

"Neither in Enron nor in Residential Capital did I make use of that report," Ray testified during a hearing before U.S. Bankruptcy Judge John Dorsey in Delaware. "They're almost a curated gathering of statements that failed to take real opinions as to what occurred."

The Enron investigation cost $90 million and the Residential Capital investigation cost $100 million, Ray said, adding that neither was helpful. Ray's testimony came as the judge considered whether to appoint an examiner in the FTX collapse as requested by the Justice Department.

"This is just too fragile an environment for me to accept yet another seat at the table," Ray testified. "We've come too far to allow that to happen."

Dorsey later said he'd take under advisement a request to appoint an examiner to investigate the collapse of FTX while the parties try to resolve their differences.

PHOTO: The logo of FTX is seen at the entrance of the FTX Arena in Miami, Nov. 12, 2022.
The logo of FTX is seen at the entrance of the FTX Arena in Miami, Nov. 12, 2022.
Marco Bello/Reuters, FILE

The collapse of FTX spurred criminal charges against its founder, Sam Bankman-Fried, who has pleaded not guilty to eight criminal charges, including fraud and conspiracy.

Ray testified that FTX has furnished 70,000 documents to federal prosecutors, who have asked 156 times for information.

"It's virtually an ongoing exercise, but the last 90 days have been an extremely intense effort to provide the information the government has requested," Ray said.

Ray said the company is also working with federal prosecutors in California, New York, Hawaii and Maryland.

FTX has sent confidential messages to political figures, political action funds and other recipients of contributions by Bankman-Fried asking them to return the money by the end of February, the company said in a press release Sunday.

The messages follow an announcement in December that FTX arranged for voluntary return. Otherwise, FTX said in a release Sunday, the company would "reserve the right to commence actions before the Bankruptcy Court to require the return of such payments, with interest accruing from the date any action is commenced."

Recipients were cautioned that using the money to make a donation to a third party, including a charity, would not prevent FTX from trying to get the money back.

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