It just got crazy: The wasteful expenses of FTX underline the lack of controls

When the FTX crypto tour, Hong Kong moved to the Bahamas last year, employees found that Amazon did not deliver to the island. They quickly found an alternative and concluded a private contract with an airline to fly their orders from a depot in Miami.

The FTX air mail engine, which was described in interviews with former employees, illustrates the wasteful benefits that Sam Bankman-Fried's crypto exchange granted to his employees before he went into bankruptcy this month.

The free-range editions collide with the public image of Bankman-Fried, the former billionaire who is only known as a "SBF" in the entire crypto industry. Bankman-Fried said his motif when building FTX for a $ 32 billion giant for digital assets was to maximize the amount that he could donate for charitable purposes in the course of his life.

But behind the great promises there was an environment in which the employees were provided for every need and in which a circle of managers in the late twenties and early thirties invested millions of dollars in everything, from trips to sports sponsorship deals to luxury real estate.

A lack of internal controls that are typical of large financial companies meant that FTX's expenses remained largely uncontrolled, according to former employees and files in the event of bankruptcy of the group in Delaware.

"[it was] children who lead children," said a former employee. "The entire operation was idiotically inefficient, but just as fascinating," they added. "I've never seen so much money in my life. I don't think someone had that, including Sbf."

A 135 million dollar deal to secure the name rights for Miamis National Basketball Stadium underlined the group's waste of waste.

Some employees questioned the company's Miami deal in the company's slack messages and asked whether he would really win new customers and offer a good price-performance ratio. "You never supervised... How much return we actually got. Nobody really asked what would come next after they received the deal," said a former employee who worked in marketing, referring to the management.

concerns about the price-performance ratio of employees with marketing experience were wiped off by Bankman-Fried and the company's top managers, this person said. Bankman-Fried or one of two other managers signed hundreds of millions of sponsorship contracts.

"It just got crazy," said the employee. "If Sam said ok, it was good to go. Regardless of the crowd."

John Ray, the new FTX boss, who led the stock exchange through the bankruptcy, said that he had never seen a "so complete failure of corporate controls".

"The [Company] did not have the kind of payout controls that I think are appropriate for a company," he said in the files and added that corporate money was spent on the purchase of houses and personal items for FTX employees and consultants.

"There seems to be no documentation for certain of these transactions.

ftx spent at least $ 300 million for real estate on the Bahamas, the company's lawyers said last week before the US bankruptcy court. "Most of these purchases concerned houses and holiday properties that were used by leaders," they said.

The real estate portfolio included at least six multimillion dollar residences in the luxurious and exclusive Albany complex of the Bahamas, including penthouses, in which Banksman-Fried lived with its inner circle of managers. Bankman-Fried refused to comment on the company's expenses.

The benefits that the employees of the stock market, which has now collapsed, was part of the bahamas available around the clock, "in addition to the free food, barbershop pop-up and two-week massages".

ftx also provided the Bahamas employees a “complete range of cars and petrol, which are covered for all employees [and] unlimited, fully covered trips to every office worldwide,” added the employee. The FTX Us employees, his separate branch for the American market, were granted Doordash credit for the delivery of food of $ 200 per day.

Alameda Research, a crypto hedge fund founded by Bankman-Fried, owes the Margaritaville Beach Resort in Nassau, which was founded by the US musician Jimmy Buffett, also $ 55,319, as can be seen from bankruptcy applications this week. A “Who’s to Blame” margarita in one of the bars of the resort costs $ 13.

Insolvency applications describe an arbitrary output system. "Employees of the FTX Group submitted payment requirements via an online" chat "platform on which a different group of superiors approved by responding with personalized emojis," said Ray.

The Bankman-Fried companies also awarded loans to managers, as can be seen from bankruptcy applications. His trading company Alameda Research awarded Banksman-Fried himself 1 billion USD, USD 543 million to the technical manager Nishad Singh and $ 55 million to Ryan Salame, co-boss of FTX Digital Markets, his unit on the Bahamas.

In addition to his role at FTX, Salame bought four local restaurants in the city of Lenox in the west of Massachusetts, near which he grew up, including the Olde Heritage Tavern and the Sweet Dreams bakery.

The recent graduates of Bankman-Fried's crypto shops also made large purchases before the group's bankruptcy. Sam Trabucco, former co-CEO of Alameda,