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The full story of how FTX’s weak internal controls contributed to its collapse

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The full story of how FTX’s weak internal controls contributed to its collapse

  • FTX had poor financial reporting processes in place
  • Poor corporate culture undermined quality of work relations
  • A compromised system exposed shareholders and users to elevated risks 

Laxity in corporate internal controls may have exacerbated FTX’s collapse, according to new CEO John J. Ray III. He pointed out that in his 40 years of legal and restructuring experience, there are four common factors that escalate a bankruptcy crisis.

These are deficiencies in internal controls, regulatory compliance, human resources and system integrity. FTX’s situation is no different. If anything, the case of the troubled exchange could be worse.  

According to the initial petition filed on 17 November, John Ray identified three key internal control deficiencies that got FTX into this mess. 

Financial reporting 

First of all, FTX had poor and distorted financial reporting. By comparison, FTX US and its U.S. affiliates were audited by Armanino LLP, a firm John Ray admitted to knowing well.

FTX International and its affiliated companies, however, were apparently audited by Prager Metis. Ray claimed that he had no recollection of this firm from a professional perspective. Interestingly, the audited financial statements of Alameda Research are not fully discoverable yet.

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Therefore, the published financial reports cannot be trusted as the process may have been subverted by Sam Bankman-Fried (SBF).  

In addition, there were no disbursement controls for FTX’s funds. There were also no supporting documents for the alleged loans from FTX funds that were purportedly used to purchase real estate in the Bahamas. Not to mention the $1 billion and $0.5 billion personal loans to SBF and Nishad Singh, FTX’s Director of Engineering, from Alameda Research. 

Worse, the loans were approved and disbursed through a “chat platform,” rather than a verifiable and auditable platform. 

Chaotic approach to human resources 

Ray also found that there were no records or defined responsibilities for most FTX employees and contractors. According to a New York Times report, some employees were living together and romantically involved.  

Such relationships could easily undermine labor relations and erode the overall corporate culture.  

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In addition, some  senior employees were unqualified and inexperienced. For example, Caroline Ellison, the CEO of Alameda Research, boasted that she needed only a basic knowledge of mathematics to become CEO of the company.

The integrity of the FTX system was compromised

Mr. Ray also confirmed that SBF and Mr. Wang were the only individuals who had access to the digital assets of FTX and its subsidiaries worldwide. The only exception for access to digital assets was LedgerX, an FTX subsidiary regulated by the Commodity Futures Trading Commission (CFTC). 

Unfortunately, the only way to access these assets was through an insecure group email account. Such a practice is unacceptable in management because the group email account was the root user for accessing the private keys of the digital assets held. As a result, the private keys and confidential FTX data could easily be compromised by cyber hacks.

Overall, these corporate control laxities have brought FTX to ruin. There is a reason why corporate governance takes precedence in any organizational system and subsequent alignment with shareholders’ interests. Take it away and things fall apart.

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Ser Suzuki Shillsalot has 8 years of experience working as a Senior Investigative journalist at The SpamBot Times. He completed a two-hour course in journalism from a popular YouTube video and was one of the few to give it a positive rating. Shillsalot’s writings mainly focus on shilling his favourite cryptos and trolling anyone who disagrees with him. P.S – There is a slight possibility the profile pic is AI-generated. You see, this account is primarily used by our freelancer writers and they wish to remain anonymous. Wait, are they Satoshi? :/

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Altcoins

UNI is ripe for buying opportunities after a bullish crossover, but…

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UNI is ripe for buying opportunities after a bullish crossover, but…

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion

  • UNI could reach the 50% Fib level in the next few days or weeks if BTC maintains its uptrend 
  • UNI’s open interest is rising, which is a bullish outlook for derivatives markets

Like the rest of the altcoins, Uniswap [UNI] also rallied after BTC regained the $16,000 level on 22 November. At press time, it was trading at $5.80 and was in an uptrend. The Moving Average Convergence Divergence (MACD) also gave investors a buy signal through its bullish crossover. 

However, the price rally faced significant resistance, which cautious traders should watch out for before going long on UNI.


Read Uniswap’s [UNI] price prediction 2023-2024


We have a buy signal, but can the uptrend last?

Source: TradingView

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In October, UNI  witnessed a major rally that extended into November before the FTX saga put the brakes on it. Subsequent recovery attempts after the market crash established $5.28 as solid support for the bulls.  

At press time, UNI was poised for another rally after BTC attempted to reclaim $17K. A bullish MACD crossover provided buying opportunities for UNI traders. However, the question was: Is the buy signal solid and could the uptrend continue? 

A key technical indicator showed that the uptrend could sustain momentum. The Relative Strength Index (RSI) retreated from the lower part of the selling range with a steep rise. This showed that the selling pressure had eased, and the bulls were able to prop up UNI’s price.  

The On-Balance Volume (OBV) also showed a rise in the upper range despite an almost flat profile since 21 November. This showed that there was a significant trading volume that could increase buying pressure.  

If the bulls maintain the above leverage, they could break the 38.2% level ($5.89) and target the 50% Fib level ($6.25). However, an intraday close below the current support at $5.28 could negate the above inclination.

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UNI sees an increasing Open Interest

Source: Coinglass

According to Coinglass, UNI saw conflicting open interest trends in November. After the market crashed in early November, UNI’s open interest rose steadily, only to drop again starting in mid-November.  

At press time, a rising open interest could be seen towards the end of November. This showed that money was flowing into the derivatives market of UNI.

Furthermore, this also indicated a bullish outlook in the derivatives market, which could soon spill over into the spot market. In this case, the upward momentum of UNI could continue if BTC continues to trend upward.

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Ser Suzuki Shillsalot has 8 years of experience working as a Senior Investigative journalist at The SpamBot Times. He completed a two-hour course in journalism from a popular YouTube video and was one of the few to give it a positive rating. Shillsalot’s writings mainly focus on shilling his favourite cryptos and trolling anyone who disagrees with him. P.S – There is a slight possibility the profile pic is AI-generated. You see, this account is primarily used by our freelancer writers and they wish to remain anonymous. Wait, are they Satoshi? :/

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PancakeSwap’s progress may not sit well with investors, is CAKE the culprit

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PancakeSwap’s progress may not sit well with investors, is CAKE the culprit

  • CAKE planning to bring a new Syrup Pool/Farm on PancakeSwap
  • However, days ahead might get harder as metrics and indicators were not supportive

PancakeSwap [CAKE] recently revealed that they have been working with Hashflow to bring a new syrup pool and farm to PancakeSwap. Before voting on PancakeSwap, the hashflow must receive more than 60% support for the syrup pool and farm.

Hey community members,

We have been working with Hashflow to bring you a BRAND NEW Syrup Pool/Farm on PancakeSwap. For the Syrup Pool and Farm to happen, the vote needs more than 60% positive votes on Hashflow itself, before it can be voted on PancakeSwap. pic.twitter.com/vReAlutILT

— PancakeSwap 🥞 #BSC (@PancakeSwap) November 29, 2022


Read PancakeSwap’s [CAKE] Price Prediction 2023-2024


Furthermore, CAKE also topped the list of projects that were the most viewed and trending on CoinMarketCap, and a possible reason for this might be the aforementioned update. Apart from CAKE, QUACK and BabyDoge also made their place in the top three.

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🎉 Most Trending & Viewed Projects on @CoinMarketCap 🔥

🥇 $CAKE @PancakeSwap
🥈 $QUACK @RichQuack
🥉 $BABYDOGE @BabyDogeCoin$DOGE @BabyDogeCoin

The Top trending cryptocurrencies that people are searching for on #CoinMarketCap🔥#BNB #BSC #WEB3 🧬 pic.twitter.com/vBoHEbQ3Ou

— BSCDaily (@bsc_daily) November 29, 2022

With all these developments on the chain, CAKE’s price action decided to take the opposite route. As of 30 November, CAKE registered negative daily gains. CoinMarketCap’s data revealed that at the time of writing, CAKE was down by nearly 1% in the last 24 hours.

Furthermore, CAKE was trading at $3.96 with a market capitalization of more than $622 million. Let’s have a look at CAKE’s on-chain metrics to understand what the last weeks of this year might have in store for it.

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Is CAKE’s goodwill dwindling?

Santiment’s data revealed that CAKE’s daily active addresses kept declining over the last month. This indicated a lower number of users present on the network. Moreover, CAKE’s weighted sentiment was also considerably lower, suggesting less popularity for the token in the crypto community.

Source: Santiment

However, the Market Value to Realized Value (MVRV) ratio gave slight hope as it registered upticks. This indicated a price hike in the coming days. Furthermore, CAKE’s burn rate was optimistic, with over 6 million CAKE tokens worth $27 million burned.

Source: Santiment

Can the market indicators give relief?

Most of the market indicators also painted a bearish picture for CAKE, which suggested that investors might have a hard time ahead. For instance, the Chaikin Money Flow (CMF) registered a steep downtick, which was bearish.

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Moreover, the Exponential Moving Average (EMA) Ribbon revealed that the bears had the upper hand in the market as the 55-day EMA was resting above the 20-day EMA. Nonetheless, CAKE’s Relative Strength Index (RSI) provided some much-needed relief by going up during the last few days. This could be a sign of a price surge in the coming days.

Source: TradingView

Ser Suzuki Shillsalot has 8 years of experience working as a Senior Investigative journalist at The SpamBot Times. He completed a two-hour course in journalism from a popular YouTube video and was one of the few to give it a positive rating. Shillsalot’s writings mainly focus on shilling his favourite cryptos and trolling anyone who disagrees with him. P.S – There is a slight possibility the profile pic is AI-generated. You see, this account is primarily used by our freelancer writers and they wish to remain anonymous. Wait, are they Satoshi? :/

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Going long on Dogecoin [DOGE]? Here’s what you need to know

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Going long on Dogecoin [DOGE]? Here’s what you need to know

  • DOGE was strongly bullish 
  • It faces a bearish order block around the 100% Fib level ($0.10790)
  • Declining development activity and negative sentiment could undermine further near-term price recovery

Dogecoin’s (DOGE) price rally began on 22 November after BTC reclaimed the $16,000 level, and at the time of writing, it resulted in a price increase of over 40%.

At press time, DOGE was trading at $0.10649, up 3% in the last 24 hours.  

However, it faced an important bearish order block around the 100% Fib level. If the bulls of DOGE maintain upward momentum, a bearish breaker could shatter the current resistance and target $0.11652. 

Double resistance at the 100% Fib level and a bearish order block

Source: TradingView

DOGE faced two closely spaced obstacles in the 4-hour time frame. One was the immediate bearish order block zone, and the other was the 100% Fib level. Can the bulls breakthrough both at the same time? 

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The technical indicators on the 4-hour timeframe suggest that the bulls could break through these obstacles. In particular, the Relative Strength Index (RSI) was at 66 after avoiding the neutral 50-level and continuing to rise. This shows the bulls have too much leverage and could move on with the uptrend momentum. 

At press time, the on-balance volume was also supporting the bulls in their forward momentum. It moved steeply higher despite a slight sideways movement. It showed that trading volumes have increased, which gives the bulls enough buying pressure to overcome the two obstacles.

Thus, if the uptrend continues, DOGE could see a bearish breaker and breach the 100% Fib level ($0.10790). 

However, a break below the current support at the 78.6% Fib level ($0.10010) would invalidate the above bias. In that case, the bulls could find new support at the $61.8% level ($0.09396).

DOGE recorded negative sentiment and a decline in development activity

Source: Santiment

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That said, DOGE recorded a steady increase in development activity from 21 November, which peaked on 28 November. During the said period, the prices of DOGE also increased. However, the decline in development activity at the time of publication also coincided with weighted sentiment sliding deeper into negative territory.  

Although DOGE has risen despite the continued negative sentiment in the past, the decline in development activity could prevent further price appreciation. The BTC’s performance could also affect the price performance of DOGE, so investors should keep an eye on it. 

Ser Suzuki Shillsalot has 8 years of experience working as a Senior Investigative journalist at The SpamBot Times. He completed a two-hour course in journalism from a popular YouTube video and was one of the few to give it a positive rating. Shillsalot’s writings mainly focus on shilling his favourite cryptos and trolling anyone who disagrees with him. P.S – There is a slight possibility the profile pic is AI-generated. You see, this account is primarily used by our freelancer writers and they wish to remain anonymous. Wait, are they Satoshi? :/

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