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Topics: US News, News, Cryptocurrency, Money
Ali Condon
Topics: US News, News, Cryptocurrency, Money
FTX's new boss has claimed that the crypto-company's security was so weak that founders could have easily stolen millions of dollars and no one would have noticed.
The downfall of FTX has been a dramatic one, to say the least, that rocked the cryptocurrency industry.
Since disgraced chief executive Sam Bankman-Fried, 30, stepped down after facing criminal charges for defrauding investors and the crypto-exchange filed for bankruptcy, John J Ray III took over as CEO.
The lawyer, who previously handled Enron's liquidation when it collapsed in 2001, is now commenting on some of the inner workings of FTX at the Delaware bankruptcy court.
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John J Ray III told the court that FTX 'is probably a case study for how not to have a controlled environment for crypto,' Coindesk reports.
He continued: "We had hot wallets in a system where multiple people had access to passwords.
"Literally, one of the founders could come into this environment, download half a billion dollars worth of wallets on a thumb drive, and walk off with them and there'll be no accounting for that whatsoever."
Ray is providing testimony for the federal bankruptcy court, who will determine whether an independent examiner should be appointed to investigate FTX's downfall.
While in court, Ray described his first 48 hours as head of FTX were 'pure hell', and that he has already charged the company $690,000 (£570,000) for the two months he has spent on sorting out their finances.
Just last month, the bankruptcy court heard how Sam Bankman-Fried, who has been described by prosecutors as one of 'the biggest frauds in American history', had his co-founder Gary Wang create a 'backdoor' that would allow his trading company Alameda access to $65 billion (£54bn) worth of customer funds from FTX without their permission.
This, according to FTX's lawyers, was a key cause of the crypto exchange's collapse.
Bankman-Fried has pleaded not guilty to the charges brought against him, which include money laundering, fraud, and campaign finance violations.
Now, FTX is calling for all political donations previously made by the company to be returned.
The exchange, which was once valued at $32 billion (£26bn), issued a press release over the weekend demanding that any political figure or group that did not refund their donation could face legal action from a bankruptcy court.
Bankman-Fried is currently in detention at his parents' California home on $250m (£207m) bail, after he was extradited from the Bahamas late last year.
A trial date for the former billionaire has been set for 2 October.