FTX Group CEO John J. Ray III appeared before Congress on Tuesday and used the opportunity to spell out in vivid detail the alleged fraudulent practices going on behind the scenes, before he took over, in the lead-up to the crypto firm's collapse. 

"I've never seen such an utter lack of record keeping," said Ray, who previously spearheaded the corporate restructuring of Enron. "Employees would communicate invoices and expenses on Slack."

He added that the company used QuickBooks for accounting purposes. "Nothing against QuickBooks. It's a very nice tool, just not for a multibillion-dollar company." 

He also speculated about more serious malfeasance, saying it's possible that FTX founders stole crypto, stored it on a thumb drive, and hid it somewhere. 

FTX's former executives were not present to respond. Founder and former CEO Sam Bankman-Fried was also supposed to appear at the hearing but was arrested on Monday night by Bahamian authorities at the request of the U.S. government. 

Since then, the Securities and Exchange Commission (SEC), the U.S. Attorney’s Office for the Southern District of New York, and the Commodity Futures Trading Commission (CFTC) have all filed charges against the disgraced founder.  

Bankman-Fried now faces a litany of charges, including knowingly defrauding customers by channeling their funds to Alameda Research, a hedge fund under the FTX Group umbrella that was presented to customers as a separate entity. 

"We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto," said SEC Chair Gary Gensler in a statement. "The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws."

For weeks, Bankman-Fried has publicly denied charges of intentional malfeasance or fraud, calling the firm's collapse the result of his "mistakes." In response to these claims, Ray, during the hearing, noted that he did not "find any such statements to be credible." 

He said FTX's collapse was a case of "old-fashioned embezzlement." He even provided examples of Bankman-Fried's personal role in committing fraud. "In one instance, he signed both as the issuer of the loan as well as the recipient of the loan," he said. 

However, Ray stressed that understanding the exact nature of what happened at FTX could still take weeks or months to understand, given the poor record keeping and complex corporate structure, which Ray said encompasses over 100 entities. 

In the meantime, lawmakers are still processing what FTX's collapse means for the broader crypto space and any future legislation or regulations. 

On the Republican side, North Carolina Rep. Patrick McHenry said Congress should separate the actions of an individual from the value of an industry and an innovation. 

"I believe in the promise of digital assets and those around the world building on blockchain technologies, and that's why I've worked, and will continue to work, to provide clear rules of the road for the digital asset ecosystem here in the United States," he said. 

Michigan Democrat Rep. Rashida Tlaib, meanwhile, said it was "laughable" that crypto could ever make the financial sector more inclusive, a common argument among proponents of crypto. 

Ray, when asked what kind of regulations could have avoided the collapse of FTX, said "the critical thing is segregation of customer funds and transparency," but held off on naming which agencies should step up to do the job. "I certainly think there should be more controls in this sector. As to who should regulate it, I defer to this committee."