FTX Bankruptcy Sparks Worldwide Disputes Between Governments and New CEO

The fall of FTX has reportedly set off clashes between its CEO and overseas regulators.

John J. Ray III took over as FTX's chief executive last month after the firm declared bankruptcy, and soon made headlines for saying the firm was the worst-run company he'd seen in his 40 years of corporate turnaround experience.

But as The Wall Street Journal reported Sunday (Dec. 3), Ray is now at odds with authorities in a number of countries.

For example, the securities regulator in Cyprus has protested Ray's decision to place FTX in bankruptcy, saying it has hurt investigations and is preventing European customers from recovering their funds.

Officials in the Bahamas, where FTX is headquartered, have accused Ray of making false statements and suggested that his team is motivated by the chance to earn large legal fees.

And authorities in Turkey have seized the assets of FTX’s local subsidiary, which the WSJ calls "an affront" to Ray’s effort to move all of the company's assets to its bankruptcy proceedings.

PYMNTS has reached out to FTX for comment.

FTX, the once-popular crypto exchange, fell apart in early November following revelations that the company used customer funds to bail out its sister trading firm, Alameda Research, to the tune of around $10 billion. This came after Alameda itself suffered heavy losses due to trading strategies that stretch back to April 2021.

The collapse has led to aftershocks that continue to reverberate throughout the crypto and venture capital communities, rattling investor confidence across the sector and leading to a number of criminal investigations.

In a bankruptcy court filing last month, Ray said FTX experienced a complete failure of corporate controls that surpassed even what he saw at the energy company Enron more than 20 years ago.

"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.

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