FTX: This chaotic bankrupt

In the case of insolvency proceedings, it is about finding assets, determining their value and then distributing them to the person who is legally belongs to them. Based on such criteria, the FTX Chapter 11 case can now be confirmed as an official nightmare.

On Thursday, his new Chief Executive, John Ray III, wrote in detailed court files that the FTX debacle "a complete failure of corporate controls and [demonstrated] such a lack of trustworthy financial information". Ray had once helped clean up Enron, so he is probably not so easy to disturb.

In the submission, Ray first described the four silos of the FTX operations. These were a trading platform based in the United States, a segment that made risk-capital-like investments, the crypto trade branch of Alameda Research and the most important offshore unit. The latter kept most of the customer accounts.

Adequate cash controls, corporate governance and accounting are essentially non-existent at FTX, Ray noted. Crypto assets have gone missing, and forensic investigators are trying to track them down in cyberspace.

How the different silos have put money around is not well understood. An example, the Alameda Research unit, showed, according to her record of September, that the FTX management personally owed her billions. This also includes the Sam Bankman-Fried, which has now been stopped. At the same time, Ray said that the financial reports he was able to find and put together were unreliable, indicating that the reality of the financial disaster is even more chaoted than initially assumed.

An important point that is noticeable in the annual financial statements is the value of the crypto accounts of FTX customers. At a certain point in time, these were estimated at $ 10 to 15 billion. FTX customers will be the ultimate creditors in this bankruptcy.

Customers have to fight with other applicants for all crypto laws that can be found. They will also fight for the value of legal disputes against the company and its managers who have brought about the collapse.

Finding and distributing assets to share with creditors will take years of effort. After all of this, don't expect them to be happy with what's left.