FTX Trading Ltd. has released its first report detailing the reasons for its failure, including control failures by the previous management team in critical areas. The report identifies the lack of appropriate controls in areas that were critical for safeguarding cash and crypto assets, including management and governance, finance and accounting, digital asset management, information security, and cybersecurity. The report also stated that FTX was tightly controlled by a small group of individuals who failed to implement oversight or implement an appropriate control framework.

The report is based on the review of terabytes of electronic data and communications, more than one million documents, and interviews conducted with 19 former FTX Group employees, among other information. The team of experts from various fields, including legal, restructuring, forensic accounting, cybersecurity, computer engineering, cryptography, and blockchain, conducted the review.

According to the report, the reasons for the failure of FTX included SBF’s final say in all major decisions, core personnel’s lack of risk management and operation experience shortly after graduating from university, Singh’s change to the code base on July 31, 2019, to allow Alameda to withdraw unlimited amounts of crypto assets from FTX, and a week later, modifying it to exempt Alameda from automatic liquidation. Additionally, the FTX group kept almost all crypto assets in hot wallets, and SBF lied about using cold wallets.

Currently, creditors have obtained more than $1.4 billion in digital assets and have identified another $1.7 billion in digital assets and are in the process of recovery. FTX’s total liabilities are approximately $12 billion.

John J. Ray III, Chief Executive Officer and Chief Restructuring Officer of the FTX Debtors, said that the Debtors are releasing the report in the spirit of transparency that they promised since the beginning of the Chapter 11 process. The review is ongoing, and the report is expected to be the first in a series regarding pre-petition events and issues that preceded the Chapter 11 cases.

FTX’s release of this report is an important step in the Chapter 11 process and provides creditors with a better understanding of the reasons for the company’s failure. The ongoing review will likely shed more light on the events that led to FTX’s downfall and help creditors recover as much value as possible.

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This article was republished from azcoinnewsc.om