[kyleplum]

> Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. 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.

Are these filings typically full of quips? This seems pretty damning but I don't read enough court filings to know whether this sort of language is typical

[lazide]

It is not only not typical, it is definitely raising eyebrows from the clerks office to the judges.

Language in these filings is usually so dry that it makes the Sahara look like Tahiti.

The cleanup CEO is mad. And he’s seen some shit.

The financial equivalent of ‘somehow folks with PhDs mixed cleaning chemicals together for no apparent reason and gassed a bunch of kindergartners’.

[Animats]

What he's really saying is, these guys had no back office accounting operation.

Usually, in a bankruptcy of a financial enterprise, there's a general ledger of transactions to look at. Some may be fraudulent, hidden amongst the legit ones. FTX does not seem to have had that. Much of the history is missing.

So it will have to be reconstructed, often from the other side of the transaction. Banks will be asked (ordered) to provide their transaction history for all relevant accounts. There will be heavy analysis of the blockchain, which is less anonymous than many people in crypto think. Whatever records FTX has will be analyzed. People identified as having dealt with FTX will be subpoenaed for their records. Gradually, cells on spreadsheets saying "On DATE transferred AMOUNT denominated in COIN to UNKNOWN" will have UNKNOWN filled in. This is forensic accounting.

In bankruptcy, that happens in public. Over time, the PACER filings for the case will fill up with details of where the money went. Some will be trackable, some won't. A lot of effort will go into finding out where big amounts went. The numbers are big enough to justify the effort.

Then come clawbacks, arrest, trials, civil litigation... A huge pain for everyone involved, but if you screw up at the 10-digit level, it gets done.

[that_guy_iain]

> The cleanup CEO is mad.

I think he is also laying the groundwork for "This is going to never be fully accurate or clear what happened."

[lizknope]

Look at the title again. This is the guy who cleaned up Enron and he is calling it "unprecedented" and says "never in my career have I seen such a complete failure..."

This is not typical language. John Ray III is a serious person.

[HWR_14]

The key are words like "unsophisticated". Enron was sophisticated, well documented, audited and done with Wall Street firms signing on. They could point to where every dollar had gone. It was an immense fraud, but no one was "unsophisticated".

[michael1999]

A company filing for a chapter 11 reorganization starts the process with a story about how they came to be in some temporary trouble, and how a renegotiation with the debtors will allow the firm to continue and thrive.

But in this case, FTX filed with a blank page where that story would be. Now the new CEO is explaining to the court that nobody knows how they came to be here, he has no idea if there is a viable company, and he has no idea if the money was spent, stolen, lost, or smoked. He doesn't even have a list of employees, or a reliable list of the bank accounts. He is aghast, and in no position to tell that kind of story.

I don't understand if there is any path for FTX that doesn't end in chapter 13. I certainly wouldn't bet on it.

[advisedwang]

I don't' know, but I suspect its an attempt to put distance between the CEO running the bankuptcy and previous leadership. Essentially signalling to the court and debtors "serious people are in charge now. Things were messed up, but I'm not like that".

[buggy6257]

The new CEO (John Jay Ray III) was the one put in charge of Enron to clean up that whole mess. I don't think anyone doubts his legitimacy at this point, so there would be no need for him to be on the defensive. He was placed here specifically for that reason, I think.

[lazide]

This guy has no reason to need to do that, his career is already rock solid - and if even 1% of the stuff coming out is true, this is an epic cluster of malfeasance and incompetence.

Usually small businesses are terrible at accounting and finance, but even they typically have some idea where their bank accounts are and what is in them

[dahdum]

> Essentially signalling to the court and debtors "serious people are in charge now. Things were messed up, but I'm not like that".

He's not trying to save or run the company. He's a liquidator with an unimpeachable reputation. From the instant he took over that distance became an ocean. I think he's just genuinely aghast, Enron was at least "clever" about their fraud, SBF and accomplices were brazen.

[Analemma_]

It is not typical. I think in this case the extreme language is meant to signal to judges and stakeholders, "this is going to take a long time and be really messy, your usual expectations of the timeline of this process do not apply".

[booleandilemma]

Are these filings typically full of quips?

Yes, according to the comment I read yesterday: https://news.ycombinator.com/item?id=33644846

They even provide a funny BuzzFeed example.

[ameister14]

This filing strongly implies there is evidence of deliberate intent and fraud; after reading it I'm betting DOJ files charges fairly soon.