5 Key Highlights From FTX Bankruptcy Filings

FTX supervisors would approve employee “payment requests” by responding with “personalized emojis”

article-image

Blockworks Exclusive art by axel rangel

share

By now, most in the cryptocurrency community have likely seen the FTX bankruptcy filings.

And as FTX’s new CEO John Jay Ray III put it, the internal management of the company was “a complete failure.”

“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,” he said.

Ray III also shared some other insight into how the Bahamas-based cryptocurrency exchange that has fallen from grace operated.

Here are the highlights:

1. Access to confidential private keys 

FTX did not comply with security controls with respect to digital assets. According to the filing, former CEO Sam Bankman-Fried and his co-founder and Chief Technology Officer Gary Wang “controlled access to digital assets of the main businesses in the FTX Group,” and used an unsecured group email account to access confidential private keys and other critically sensitive information. 

Loading Tweet..

2. Misuse of customer funds

Bankman-Fried’s free roaming days might soon be over after the bankruptcy filings revealed that FTX had used “software to conceal the misuse of customer funds” and ensured that Alameda was exempt from “certain aspects of FTX.com’s auto-liquidation protocol.”

Loading Tweet..

3. Unaudited financials

The four silos — or groups of businesses — which made up the FTX group all provided quarterly financial statements. But, Ray said, “because this balance sheet was unaudited and produced while the Debtors were controlled by Mr. Bankman-Fried, I do not have confidence in it and the information therein may not be correct.”

4. Loans to themselves

Alameda Research provided loans to, well, themselves. This includes, a $1 billion to Bankman-Fried himself, a $543 million loan to Nishad Singh, who according to his LinkedIn, was the director of engineering at FTX, and a $55 million loan to Ryan Salame, the CEO of FTX Digital Markets.

To make matters worse, it was likely that much of these corporate funds were “used to purchase homes.” 

5. No employee management

There was no employee management system, and “debtors have been unable to prepare a complete list of who worked for the FTX Group…or the terms of their employment.”

In fact, employees were paid by submitting “payment requests” on an “online chat platform.” Their supervisors will approve their requests and notify payment “by responding with personalized emojis.” 

Further, Bankman-Fried had often communicated on “applications that were set to auto-delete after a short period of time, and encouraged employees to do the same.”

Loading Tweet..

Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

🚀 Build What’s Next — Permissionless IV Hackathon Join us June 22–23 in Brooklyn for the Permissionless IV Hackathon — a 36-hour sprint hosted by Cracked Labs and Blockworks where top builders turn ideas into real products. Come to launch, not just […]

recent research

Research Report Templates (10).png

Research

Kamino has evolved into a full-stack asset scaling suite with V2: unlocking new markets, improving capital efficiency, and catering to various risk profiles. We believe it is best positioned to become the credit backbone of Solana as the ecosystem matures. Simply put, KMNO remains our highest-conviction bet in the Solana ecosystem. This report lays out our thesis.

article-image

Greenwood was a success story before it was a tragedy

article-image

All eight included staking in their most recent SEC filings

article-image

With an updated Summary of Economic Projections, the Fed sees growth slowing and inflation increasing

article-image

Where do crypto mobile games go from here?

article-image

Bybit’s Byreal, Binance Alpha and Coinbase’s DEX integrations

article-image

This isn’t the worst hack to ever hit Mt. Gox, but it could be the most entertaining