It did? The whole collapse was kicked off by someone looking at the books and raising an alarm.
If you’re instead asking why financial audits paid for by FTX didn’t publicize the company’s solvency issues, well, we’ll all find out during the upcoming bankruptcy proceedings.
> Because no one wanted to look at it. Softbank, Sequoia and many others that would have had access didn't do their job.
According to John J. Ray on the 17th of November in filings to the U.S. Bankruptcy Court [1]:
"The audit firm for the WRS Silo, Armanio LLP, was a firm with which I am professionally familiar. The audit firm for the Dotcom Silo was Prager Metis, a firm with which I am not familiar and whose website indicates that they are the 'first-ever CPA firm to officially open its Metaverse headquarters in the metaverse platform Decentraland'
56. I have substantial concerns as to the information presented in these audited financial statements, especially with respect to the Dotcom Silo. As a practical matter, I do not believe it appropriate for stakeholders or the Court to rely on audited financial statements as a reliable indication of the financial circumstances of these Silos.
57. The Debtors have not yet been able to locate any audited financial statements with respect to the Alameda Silo or the Ventures Silo."
That isn't to say that the behavior of Softbank et al isn't questionable. They probably knew very well that things looked fishy, but also probably knew that they would likely see very handsome returns in the short-term.
In short, they didn't have accounting. Nor where their books audited. FTX is a great example of ehy banks, and every other company, has regular audits of their books. As is Wirecard, but they didn't steal customers money.
Just compare the "balance sheets" SBF prepares to a proper audited one, and the differences are clear as day. One can grab any audoted balance sheet from any publicly traded US company of the SEC website, I'd pick one from a financial insitution.
But given their complex corporate structure that involved a number of offshore entities, it was possible for the CEO to play a shell game. Also audits are merely snapshots in time.
Ah, yeah, those "audits". Done on only a small portion of FTX and by one auditor that the guy who cleaned up Enron doesn't know anything about (forgot which one of those two, but I think Armanino was called out in the Chapter 11 finding as being kind of suspicious; EDIT: the called out one was Prager Metis, see the other sister comment). So, these "audits" are basically worthless, and in a different category like, say, a properly conducted SOX audit.
Seriously, read the Chapter 11 filing from the new CEO. It explains a lot of those topics.
And yes, my answer to all those crypto related shenanigans is proper government oversight. If you act like a bank, you have to be regulated like a bank. If you act as a securities trader, same thing. As an investment bank / fund? Likewise. That you made up the securities and assets you trade in and manage by yourself and literally out of thin air (and some electricity and some GPUs) shouldn't change that.
> And yes, my answer to all those crypto related shenanigans is proper government oversight.
So SBF was making the same argument, argued in front of Congress for it, and was using his customer's billions to lobby for favorable legislation that would carve out expensive, exclusive licensing agreements that only him and a few others would be able to afford.
Even if you pass draconian legislation in the U.S., it does not affect what happens off-shore. FTX's core business was based in the Bahamas.
Whatever SBF has "admitted to" in WhatsApp with his benefactors at the NYT or whomever is PR / damage control, etc. It cannot be relied upon as the guy has shown the behavior of a pathological liar and manipulator.
> Bahamas or not, if you operate in the US, US rules apply for your US business
That's just it, isn't it? FTX.us was in US jurisdiction, but FTX.com was an international organization where the vast majority of FTX's trading activity took place. They wouldn't have had to uphold U.S. laws or regulations at FTX.com, even if onerous measures were to pass.
I don't know if we need to assume corruption here. It's probably more likely they didn't fully understand what they were doing, had a few spreadsheets waved in front of them and didn't really look into any of it particularly closely.
