The veteran lawyer overseeing defunct crypto exchange FTX’s ongoing bankruptcy proceedings will soon offer potentially damning testimony against the exchange’s former chief, Sam Bankman-Fried. 

In testimony published on Monday, recently appointed FTX CEO John J Ray III, who oversaw the bankruptcy of Enron in the early 2000s, made it clear that Bankman-Fried mixed customer and corporate funds despite claims to the contrary.

“First, customer assets from were commingled with assets from the Alameda trading platform,” said Ray. Alameda used these funds to engage in margin trading, exposing them to “massive losses,” he added.

Ray’s testimony could have far reaching implications for any legal defense that Bankman-Fried hopes to make. The FTX founder and former CEO has portrayed— and planned to portray in now-scrapped Congressional testimony, a transcript of which was obtained by Forbes—an image of negligence in managing FTX’s affairs, claiming on more than one occasion that he “didn’t knowingly commingle” FTX user funds with his trading firm Alameda Research. 

As of Monday, Bankman-Fried is now in custody and awaiting extradition by US authorities, which means his own testimony could come soon. That could cause him difficulty, according to industry watcher Nic Carter, a general partner at Castle Island Ventures who said on Monday that Bankman-Fried would likely be “hamstrung” by Ray’s testimony, which will come before his own and put him on the back foot.  

“He goes first, and he is contradicting everything Sam is going to say, and John Ray wouldn’t perjure himself, so it means Sam won’t be able to say anything without perjuring himself,” Carter wrote. 

Ray’s testimony will also likely be damaging for a number of other FTX executives involved in the exchange’s collapse. 

Ray disclosed a “spending binge” by the FTX Group between 2021 and 2022 in which the entity spent $5 billion on businesses and investments–most of which were not worth nearly as much as the amount for which they were acquired. The group also disbursed over $1 billion worth of loans to FTX insiders, the testimony said.

He also revealed that FTX US was not, in fact, operated independently of This directly contradicts Bankman-Fried’s consistent claims to the contrary and that FTX US was a separate legal entity. In a Dec. 1 tweet, Bankman-Fried had said he was fairly sure that FTX US was solvent and all customers could be made whole.

“I’m not sure why US withdrawals were turned off,” said Bankman-Fried at the time.