New CEO Says FTX’s ‘Complete Failure’ Worse Than Enron

Despite 40 years of corporate restructuring experience, John J. Ray said he’s never seen a company as badly run as fallen cryptocurrency exchange FTX.

In a Thursday (Nov. 17) filing with U.S. bankruptcy court, Ray — appointed CEO last week as part of the bankruptcy proceedings — said FTX experienced a complete failure of corporate controls that surpassed even what he saw at Enron.

“From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” Ray said in the filing.

FTX and about 130 of its affiliated companies filed for Chapter 11 bankruptcy protection last week following a liquidity crisis, investigations by U.S regulators, and the cancellation of a possible purchase by rival cryptocurrency exchange Binance.

The collapse of the once well-regarded crypto exchange has continued to mushroom since then. This week saw reports that BlockFi, a digital asset lender that got a bailout from FTX this summer and has significant exposure to the exchange, is planning to lay off staff and is considering bankruptcy of its own.

And while Ray may consider FTX to be worse than Enron, there are some parallels between the crypto exchange and the disgraced energy giant, PYMNTS noted recently.

There’s this comment from former Treasury Secretary Larry Summers, who said both companies had a few commonalities: “financial error,” “whiffs of fraud” and “vast explosions of wealth that nobody understands where it comes from.”

There’s also the fact that FTX founder Sam Bankman-Fried is something of a “celebrity CEO” like Enron’s Kenneth Lay, appearing on magazine covers, making huge campaign contributions and rubbing shoulders with politicians (in Bankman-Fried’s case, Bill Clinton and Tony Blair).

Now, Bankman-Fried is facing a host of regulatory investigations around the world, all while insisting, as of Wednesday, that he can still save his company.

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