John J Ray III is not current CEO of FTX international apparently, according to SBF

Feature Image: HackerNoon’s Stable Diffusion AI, Prompt “my land not your land”

Misstatements

There have been a number of statements made over the course of this process which I believe are inaccurate or substantially misleading. Below is a partial list of them.

1. Numerous assertions, by the Chapter 11 process and team, that John Ray is CEO of FTX International. John Ray is not CEO of the primary operating entity of FTX International.

2. Numerous assertions, by the Chapter 11 process and team, that there was unauthorized access of customer funds by The Bahamas.

   1. In one Chapter 11 filing, John Ray stated that there was “credible evidence that the Bahamian government is responsible for directing unauthorized access to the Debtors’ systems for the purpose of obtaining digital assets of the Debtors — that took place after the commencement of these [Chapter 11] cases.”
   2. The Bahamas is where FTX International is headquartered; the Security Commission of The Bahamas is the primary regulator for FTX International; the mind and management of FTX International has been in The Bahamas. Further, prior to the Chapter 11 filings, the Securities Commission of The Bahamas initiated an administrative process over FTX Digital Markets, the Bahamian entity and operating entity of FTX International, an entity which was thus not included in the Chapter 11 filings.
   3. The Bahamas stepped in to safeguard customer assets, acting in their duty as the primary regulator of FTX International. Meanwhile, John Ray’s team–run out of the United States–initiated an asset seizure of FTX International, a company run from The Bahamas, regulated in The Bahamas, and servicing non-US clients.
   4. Their assumption, without evidence, of malign intent and incompetence on the part of other races, cultures, and governments would be considered deeply offensive if directed at American minorities. It is no less offensive when directed at the citizens of other countries, let alone their regulators. Meanwhile, seizing assets overseen by other governments is a practice most recently considered appropriate centuries ago.

3. I believe that the current Chapter 11 team has significantly overstepped its mandate.

   1. Numerous entities were improperly placed in Chapter 11 proceedings by the Chapter 11 team, either because:

      1. John Ray was not the CEO of the entities;
      2. they were not owned by FTX, FTX US, or Alameda Research to begin with;
      3. they are subject to other global insolvency processes that preceded and thus supersede the Chapter 11 process; or
      4. they were not filed properly

   2. This includes entities that I believe own the vast majority of customer accounts of FTX International, and oversee the vast majority of customer assets.

   3. I believe that the assets, properties, credentials, passwords, cryptographic keys, domain names, and governance of FTX International should rest with the CEO, Board of Directors, and/or locally regulatorily appointed administrators of the core entity or entities that primarily operated FTX International.

      1. Those are the entities that most of the customers of FTX International faced, that controlled most of the assets of FTX International, that housed the mind and management of FTX International, and that had ultimate governance over most of FTX International, during this global restructuring process.
      2. I hope that Mr. Ray and the Chapter 11 team can agree with me on that.

   4. I believe that much of the current Chapter 11 team–including Alvarez and Marsal among others–is putting in a heroic effort to manage a difficult global business on very little notice, but that the initial and current leadership and direction they have gotten has been counterproductive. I further think that the leadership does not have legal authority to lead the global restructuring and financing effort, as they are not the current CEO, Board of Directors, or locally regulatorily appointed administrators of the core entity that primarily operated FTX International. As such, I believe they are acting outside of their mandate, defying law in multiple jurisdictions, and misappropriating funds that are the property of the primary entity of FTX International. I think that the Chapter 11 team would be extremely useful and better served working constructively with the legally and regulatorily valid global leadership of the operating entities of FTX International.

4. In one Chapter 11 filing, John Ray stated that “the dilutive ‘minting’ of approximately $300 million in FTT tokens by an unauthorized source after the Petition Date”. There was no such minting, as block explorers would confirm. This statement is bizarre, confrontational, false, and harms the reputation of people including myself.

5. In one Chapter 11 filing, John Ray included a graph regarding FTX customers by jurisdiction, claiming that over 20% of users were from the Cayman Islands. In fact, according to data from October 20th, 2022, less than 1% of trading accounts on FTX were from the Cayman Islands.

   

6. There have been various statements made by John Ray in filings about his own team’s inability to produce data, including “a complete list of who worked for the FTX Group”; “daily reconciliation of positions on the blockchain”; “a list of their top 50 creditors that includes customers”.

   1. To my knowledge, each of these existed, and I personally would have been able to produce some of the above. Neither I, nor to my knowledge most of the international leadership team, has been asked to help with queries including the above.
   2. I offered to help John Ray. I also alerted him to potentially significant information about the businesses. He has never responded to any of my messages.

7. John Ray complained about “The failure of the co-founders and potentially others to identify additional wallets believed to contain Debtor assets”

   1. To my knowledge, I have never been asked to identify such wallets. To my knowledge, no such wallets exist.

8. I believe that United States regulators may have been told materially misleading information about FTX US, including claims that FTX US is not solvent. I believe that it is solvent.