Incredulous New CEO Says FTX Used QuickBooks to Manage Billions

Sam Bankman-Fried, the disgraced founder of crypto exchange FTX, took multiple personal loans totaling a billion dollars or more from his trading company, Alameda Research, FTX’s new CEO testified before Congress Tuesday.

Bankman-Fried, who was arrested Monday on charges of wire fraud, conspiracy to defraud the United States, and more, told regulators he re-invested the money back into the exchange. But Ray says there is no documentation of what the loans were for or how they were used.

In at least one case, Ray said, Bankman-Fried signed the loan as both the issuer and recipient.

The loans were just one of the many alleged failures Ray listed in his testimony before the House Financial Services Committee. Bankman-Fried was also scheduled to testify at the hearing, part of an investigation into the downfall of his $32 billion company, before his arrest in the Bahamas.

“I’ve done probably a dozen large-scale bankruptcies over my career, including Enron,” said Ray, who took over the company shortly after it filed for bankruptcy last month. “The FTX group is unusual.”

Ray expressed astonishment that there was “no record-keeping whatsoever” at the business. Employees passed along invoices and expenses via Slack as opposed to a formal process, he said, and the multibillion-dollar operation used QuickBooks to manage its finance. Meanwhile, Ray continued, there was no independent board to serve as a watchdog.

Contrary to Bankman-Fried’s own representations, Ray alleged there was virtually no separation in the leadership between FTX, its U.S. arm, and the trading firm. The CEO claimed there was “virtually no distinction whatsoever” between the leadership of the three entities, and that the owners could “run free rein” among all of them.

The point was important given that SEC investigators allege that FTX lent customer funds to Alameda to make risky bets, putting customers’ assets at risk and ultimately losing them when the company crashed. Bankman-Fried has claimed he was unaware of the customer funds being lent to Alameda, seeming to place blame on Alameda CEO and his on-and-off girlfriend, Caroline Ellison.