FTX accounting is torture – Since the bankruptcy of the platform FTX in November 2022, the buyers and liquidators led by John J. Ray III live a hell in the lush and wild jungle that is accounting of the group founded by Sam Bankman-Fried (SBF). One of the last scandals to date is to have discovered that 100 million dollars in Ethereum (ETH) had their private key stored without encryption on a server accessible by several employees.
Sam Bankman-Fried admits Alameda is an unauditable mess
The group’s liquidators FTX have just released a report, this April 9, 2023, on the many “control failures” Sam Bankman-Fried companies (“failures” being a very polite and weak word for this infamous mess).
In this 45-page document, it is words spoken by SBF himself that best illustrate the vast joke that was the management ofAlameda Research. The founder and ex-CEO of FTX even refers to his company as a « unauditable » (impossible to audit) his accounts were such a mined field of ruins.
« [Alameda] is hilarious, beyond any threshold of an auditor’s ability to perform even part of an audit. Alameda is not auditable. I don’t mean that a major accounting firm would be reluctant to audit it; by that I mean we are only able to roughly assess its balances, not to mention something like a full transaction history. Sometimes we find assets worth $50 million that we had lost track of; such is life. »
Sam Bankman-Fried on his own company Alameda Research
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Hundreds of Millions of Dollars of FTX Crypto “Storaged”
If accounting was disastrousthe management of the storage of cryptocurrencies was, it, downright scary. The description of these (non-)care methods by John Ray’s teams is clear:
“Despite the obvious risks, private keys and mnemonic phrases (seed phrases) used by FTX.com, FTX.US and Alameda were stored in various locations within the FTX Group computing environment, in a disorganized manner, using various insecure methods and without any consistent or documented procedures. »
Among the amusements given as an example, therefore, is the storage of the private keys of 100 millions de dollars d’ethers in a note file clear text (without any encryption/protection) on a server of the FTX group. Better (or worse, rather) private keys allowing access to “billions of dollars worth of crypto-assets” were stored via the service Amazon called “AWS Secrets Manager”. However, the liquidators refer to this tool as unsuitable for such sums. In effect, any employee of FTX with access to this Amazon service could have accessed and transfer ces cryptos.
If the evidence of catastrophic mismanagement multiplies, Sam Bankman-Fried continues to play the innocent. Indeed, the ex-CEO of FTX has just recently plead not guilty to two new legal charges concerning him. Which also brings to the number of 13 THE charges against him.
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