FTX’s Financial Control Lacked Adequacy, Reveals Court Filing
According to a court filing, FTX’s financial controls were managed through an assortment of online shared documents and communications across different apps, including Excel spreadsheets and Slack messages. FTX’s CEO, John Ray III, stated that the company’s control failures were identified by his restructuring team, and these included a lack of appropriate financial and accounting controls, an inadequate group management structure, and an ineffective record-keeping process.
FTX relied on QuickBooks accounting software, which was not suitable for a firm that operates across multiple continents and platforms like FTX. Co-founders Sam Bankman-Fried and Gary Wang, along with former engineering director Nishad Singh, had significant control over FTX’s decisions despite their limited experience. In response to concerns raised by Brett Harrison, the president of FTX.US, regarding the lack of delegation of authority, formal management structure, and key hires at FTX.US, his bonus was significantly reduced, and he was instructed to apologize to Bankman-Fried. Harrison refused to do so, and it was reported that he resigned following the disagreement.