A recent report reveals that the former President of FTX US, Brett Harrison, stepped down from his position in September 2022 due to an ongoing disagreement with CEO of FTX, Sam Bankman-Fried, and his circle. In addition, the report alleges accounting downfalls at the now-failed crypto exchange, which Bankman-Fried and his colleagues could have better managed. As per the report, employees were instructed by an unnamed higher-up to provide “some numbers” for a portfolio summary in June 2022, but the information was inaccurate.
Harrison expressed worries regarding the management of FTX US, such as the absence of a traditional management structure, the requirement for key hires, and the need for delegation of authority. His bonus money was significantly reduced when he expressed these concerns to Nishad Singh and Bankman-Fried. Company lawyers instructed him to say sorry to Fried Bankman, but he didn’t agree.
The report also suggests that an employee in the exchange’s legal department was fired after raising concerns about Alameda’s inefficiency of corporate controls, risk management, and capable leadership. FTX’s leadership frequently lost track of all accounts and didn’t cash checks that piled up like trash mail. In addition, Alameda was unclear about its own positions, and Bankman-Fried admitted that the company was unauditable.
Despite Bankman-Fried’s assurances about the exchange’s security, FTX held most of its crypto assets in hot wallets, which allowed an unknown hacker to steal $432 million worth of crypto from FTX-controlled wallets the night the exchange filed for bankruptcy. The report was filed with the US bankruptcy court in Delaware by FTX CEO John J. Ray III and provided the first detailed account of the exchange’s control failures since its collapse in November 2022. When contacted by CoinDesk, Harrison acknowledged the report’s contents but refrained from providing further comments.
