Topline
In an interview with Wall Street Journal, FTX CEO John J. Ray III, the veteran bankruptcy attorney leading the embattled crypto firm through its restructuring, said he would explore whether restarting the exchange could be a viable alternative to simply selling off its assets, suggesting the company that suddenly collapsed late last year and lost billions of dollars of customer funds could make an unlikely return.
FTX founder Sam Bankman-Fried leaves following his arraignment in New York City on December 22.
Key Facts
“Everything is on the table,” Ray said in the interview published Thursday, noting the company set up a task force to explore bringing back FTX’s international exchange after some FTX stakeholders “identified what they see is a viable business.”
Though it remains unclear how likely—or even possible—a reboot may be, the attorney said the firm is still scouring FTX’s data in attempt to retrieve additional funds; as of Tuesday, the company has recovered about $5.5 billion in assets, but it’s still on the hook for at least $3 billion more.
The company is also looking into selling the platform or simply liquidating assets as quickly as possible, said Ray.
The new chief, who led disgraced energy firm Enron after its storied collapse in 2001, also criticized former FTX CEO Sam Bankman-Fried, saying “he hasn’t told us anything that I don’t already know,” and adding: “We don’t need to be dialoguing with him.”
Bankman-Fried responded to the critique on Twitter, saying he’s “glad Mr. Ray is finally paying lip service to turning the exchange back on after months of squashing such efforts” and insisting the U.S. arm of FTX has enough liquidity to return money to customers—a claim the firm has denied.
Sullivan & Cromwell LLP, one of the law firms representing FTX, did not immediately respond to Forbes’ request for comment.
Key Background
FTX abruptly filed for bankruptcy in November following a liquidity crisis sparked by rival Binance selling off all its FTX tokens, and within days, allegations of mismanagement came to the fore. In a bankruptcy filing that month, Ray issued a scathing critique of the company’s management, which he noted was marked by “faulty regulatory oversight” at the hands of a “very small group of inexperienced, unsophisticated and potentially compromised individuals.” Federal prosecutors have charged Bankman-Fried with crimes including conspiracy to commit money laundering, accusing him of fraudulently using FTX investors’ funds to pay expenses for his proprietary trading firm Alameda Research, and misleading Alameda’s lenders and FTX’s investors about the two firms’ financial condition.
Surprising Fact
FTX was valued at $32 billion after its last funding round in January 2022—less than three years after it was founded.
Further Reading
New FTX Chief Says Crypto Exchange Could Restart (WSJ)
FTX Secretly Channeled A $50 Million Loan To Its Bahamian Bank Through An Executive’s Company (Forbes)
Exclusive Transcript: The Full Testimony Bankman-Fried Planned To Give To Congress (Forbes)
Source: https://www.forbes.com/sites/jonathanponciano/2023/01/19/ftx-exploring-whether-to-restart-bankrupt-exchange-new-chief-says/