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Genevieve Roch-Decter, CFA@GRDecter

I read the 30 page FTX Bankruptcy court filing.

How bad were FTX's internal controls?

Here are the worst examples

Genevieve Roch-Decter, CFA@GRDecter

1. Employees submitted expense reimbursements over chat

A random manager would accept or reject those reimbursements with an EMOJI

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Genevieve Roch-Decter, CFA@GRDecter

2. Related party loans:

Alameda Research (FTX's hedge fund) gave Sam Bankman-Fried a $1 billion personal loan

They also loaned Director of Engineering Nishad Singh $543 million

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Genevieve Roch-Decter, CFA@GRDecter

3. Very few records were kept.

Most decisions were made over chat, with the messages automatically deleted after a certain time.

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Genevieve Roch-Decter, CFA@GRDecter

4. FTX, a company valued at $32 billion, never had board meetings.

Neither did most of the subsidiaries.

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Genevieve Roch-Decter, CFA@GRDecter

5. FTX had no cash management system.

Management had no idea how much cash was on hand at any given time, or even where all their cash was.

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Genevieve Roch-Decter, CFA@GRDecter

6. FTX didn't keep proper records of who they employed.

Employees and contractors co-mingled throughout the different companies without proper documentation of how they spent their time.

Certain employees can't be located: Which could mean that some employees were fake.

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Genevieve Roch-Decter, CFA@GRDecter

7. Corporate funds were used to purchase personal use real estate.

And employees & executives put their names on homes purchased with company funds.

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Genevieve Roch-Decter, CFA@GRDecter

8. Crypto deposited by customers weren't even recorded on the balance sheet.

Presumably, all crypto assets just went into one central slush fund used for whatever.

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Genevieve Roch-Decter, CFA@GRDecter

9. The filing makes clear that Sam Bankman-Fried does not speak for the company, and that his erratic and misleading public statements should not be disregarded.

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Genevieve Roch-Decter, CFA@GRDecter

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Genevieve Roch-Decter, CFA (@GRDecter)
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