The FTX trade daughter Alameda Research had no limitation for borrowing from the crypto exchange

ftx gave the affiliated trading company Alameda Research the opportunity to borrow funds from the cryptocurrency exchange "without effective limits", according to the managing director appointed by the court, and emphasized the depth of the connections between the two groups of digital assets that failed last month.

John Ray III provided new details about FTX and Alameda in a written testimony that was published before a congress hearing planned for Tuesday to collapse the crypto exchange. Ray was appointed successor to FTX founder Sam Bankman-Fried, who is also supposed to testify before the Financial Service Committee of the US House of Representatives.

The opaque relationship between the FTX and Alameda based on the Bahamas is the focus of the corporate catastrophe, which led to the decline of an stock exchange that was once estimated at $ 32 billion, on legal studies and potential losses for millions of creditors, including small investors.

Bankman-Fried, who founded FTX and Alameda, had long said that the two groups operated independently. Since his collapse, he has said that he had never tried to commit fraud, but admitted mistakes and management errors.

ray, which was appointed by a judge to the management of the FTX insolvency, said that customer assets from the international stock exchange of FTX mixed with assets from the Alameda trading platform. "Secondly, Alameda used customer funds to operate margin trading, which caused customer funds to be exposed to massive losses," says his testimony.

he added that the US branch of FTX, which was founded as a unit separated by the international stock exchange, was "not operated independently". This made it necessary to send both companies to the US bankruptcy to prevent a "run on the bench" at FTX Us, "said Ray.

The FTX group of companies finally collapsed because of "the absolute concentration of control in the hands of a very small group of grossly inexperienced and unrequited people," said Ray.

The managers "failed to implement practically all systems or controls that are necessary for a company that the money or assets of other people are entrusted," he added.

ray, which monitored the bankruptcy of Enron, listed several "unacceptable management practices". This included the access of managers to systems in which customer assets were stored, "without security controls to prevent them from redirecting these assets".

He added that private keys that were used to hundreds of millions of dollars of crypto-assets without controls or encryption, and that there were "no complete documentation" for almost 500 investments made with FTX funds.

ray added that FTX "experienced an expenditure frenzy at the end of 2021 to 2022, in which around $ 5 billion was spent on investments that are now" only a fraction of what was paid for them ".

ftx insider received loans and payments of more than $ 1 billion from the company, he stated.

"With regard to the company infrastructure and the management of records that you would expect in an international multi -illium dollar business, we start almost zero in many ways," said Ray.