People seem to forget that the entire point of shell structures is accounting tricks.
Sure FTX (the audited entity) really did have a piece of paper saying “magic beans company owes FTX $1bn in bitcoin” and all a GAAP audit would do is look at that paper and say “yep, this paper is worth $1bn (with maybe some repayment risk discount).” Maybe a good audit team tries to understand who really owns magic beans corp, but it’s easy to hide things like that.
FTX the audited entity could be totally fine, but then the shells are where the problem lies.
Sure FTX (the audited entity) really did have a piece of paper saying “magic beans company owes FTX $1bn in bitcoin” and all a GAAP audit would do is look at that paper and say “yep, this paper is worth $1bn (with maybe some repayment risk discount).” Maybe a good audit team tries to understand who really owns magic beans corp, but it’s easy to hide things like that.
FTX the audited entity could be totally fine, but then the shells are where the problem lies.