It goes from bad to worse for FTX and founder Sam Bankman-Fried (SBF), after a damning condemnation from the new CEO, highlighting “unprecedented and complete failure of corporate controls.” Alongside, previous red flags being highlighted by a would-be early investor, the wider crypto market and Bitcoin remain under bear pressures.
YOUR CAPITAL IS AT RISK
FTX Financial records Worse Than Enron
FTX’s financial records were worse than Enron it has been claimed but its administrator. A court filing posted on Thursday contained an uncomplimentary judgment of the bankrupt cryptocurrency exchange. John Ray III, the new FTX boss, stated the company suffered an “unprecedented and complete failure of corporate controls”. Having administered the collapse of the energy giant Enron alongside some of the biggest bankruptcies ever over the past 40 years, he stated Thursday that he had never seen anything as bad as FTX!
In the filing, Ray stated, “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.”
Early Red Flags, as Risk Taking Labelled “Catastrophic”
According to an early potential investor in one of Sam Bankman-Fried’s companies, Alameda Research, grave red flags were waving before the FTX cryptocurrency exchange even launched. A managing partner of New York venture capital firm Hack VC, Alex Pack, met SBF in 2018. Pack said, “I was captivated by him for the first month until he showed us everything,” describing him as “incredibly smart and charismatic.” But Pack went on to tell CNBC “After spending months with him, we realized his risk-taking was catastrophic. We looked at it and saw red flags – too much risk.”
Maybe the writing was on the wall after all?
Where Next for Bitcoin?
Bitcoin (BTC) has stabilised over the past week or so in the aftermath of the price plunge created by the collapse of FTX. However, in technical analysis market speak, Bitcoin is experiencing a “dead cat bounce”. What is a dead cat bounce”? It is when the market plunges, then consolidates, hardly recovering or retracing much of the impulsive losses. Dead cats don’t bounce!
Only back above 18173 would minimally ease the still bearish outlook for BTC, with a better recovery needing a push up through 21425.
The threat remains for lower prices through the recent bear cycle low at 15585, maybe to target 12555, and even 10000.