NEW YORK – Advisers overseeing the ruins of Mr Sam Bankman-Fried’s FTX Group laid bare a stunning list of allegations against the company’s former leadership on Thursday, slamming non-existent oversight and the misuse of client funds as they struggle to locate billions of dollars in missing assets.

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information,” Mr John Ray III, the group’s newly appointed chief executive officer, who formerly oversaw the liquidation of Enron, said in a sworn declaration submitted in bankruptcy court.

“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,” he added.

The documents depict a freewheeling crypto enterprise devoid of virtually every policy and practice that would be the norm for almost all other corporations. What is more, these will likely help fuel any criminal and regulatory action against Mr Bankman-Fried, with FTX already facing a probe by United States prosecutors.

Advisers have located “only a fraction” of the digital assets that they hope to recover during the Chapter 11 bankruptcy, Mr Ray said. They have so far secured about US$740 million (S$1 billion) of cryptocurrency in offline cold wallets, a storage method designed to prevent hacks.

The company’s audited financial statements should not be trusted, Mr Ray said. Advisers are working to rebuild balance sheets for FTX entities from the bottom up, he added.

The slipshod record-keeping and lack of organisation will make it even more challenging for scores of FTX advisers working round the clock to recover the billions of dollars customers are owed.

Mr Ray pulled no punches in the declaration, calling Mr Bankman-Fried’s recent public statements “erratic and misleading”. In their attempts to round up FTX’s cash, advisers have told financial institutions to freeze withdrawals and reject any instructions from Mr Bankman-Fried.

FTX “did not maintain centralised control of its cash” and failed to keep an accurate list of bank accounts and account signatories, or pay sufficient attention to the credit-worthiness of banking partners, according to Mr Ray. Advisers do not yet know how much cash the company had when it filed for bankruptcy, but have found about US$560 million attributable to various FTX entities so far.

The company’s record-keeping was so lax, Mr Ray said, that advisers “have been unable to prepare a complete list of who worked for the FTX Group as of the petition date, or the terms of their employment”.

Among other alarming claims in the court filing: Software was allegedly used to conceal the misuse of customer funds; Alameda Research, Mr Bankman-Fried’s trading firm, was secretly exempt from some aspects of FTX.com’s trading policies; and a single, unsecured group e-mail was used to access private keys and sensitive data around the world.

Mr Ray also noted that lasting records of decision-making are hard to come by. Mr Bankman-Fried often communicated through applications that auto-deleted in short order and asked employees to do the same.

Corporate funds of FTX Group were used to buy homes and other personal items for employees, Mr Ray said. Some of the real estate was recorded in the personal names of employees and FTX advisers, he wrote, and the company’s disbursement controls were not appropriate for a business.

“For example, employees of the FTX Group submitted payment requests through an online ‘chat’ platform where a disparate group of supervisors approved disbursements by responding with personalised emojis,” according to the statement.

A footnote in the documents indicates that Alameda Research, a subsidiary of the crypto trading house, had lent US$1 billion to Mr Bankman-Fried and more than US$500 million to FTX co-founder Nishad Singh as at Sept 30. The financial reports detailing the transactions were unaudited, produced while Mr Bankman-Fried controlled the business, and Mr Ray emphasised that he does not have confidence in their accuracy.

FTX is now fighting Mr Bankman-Fried about whether his empire should be under the jurisdiction of US courts, where more than 100 related companies are in bankruptcy, or in the Bahamas, his preferred location. FTX’s legal team has blamed the meltdown in part on poor oversight by non-US regulators. BLOOMBERG