In what would be the most shocking comeback since Michael Jordan returned to the NBA (pick either time that it happened), bankrupt crypto exchange FTX wants a fresh start.
What happened: Current CEO John Ray III has begun looking for interested parties to help revive its flagship international crypto exchange, per The Wall Street Journal.
Catch-up: FTX collapsed in spectacular fashion last year after improperly using customer funds to prop up its sister crypto trading firm, Alameda Research.
- An estimate from the firm’s new management estimates that FTX was missing almost US$9 billion in customer funds when it went kaputt.
Yes, but: The planned relaunch comes at a dramatic time in FTX’s bankruptcy proceedings.
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Management dropped a bombshell report with new allegations of the extent to which former CEO Sam Bankman-Fried (SBF) and staff misappropriated customer funds.
- “Simply put…” the report reads, “the FTX Group made no meaningful distinction between customer funds and Alameda Research funds.”
Why it matters: FTX management believes the firm is still a viable business and argues that a reboot could offer the best chance of raising the astronomical sum owed to customers.
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A new FTX could also potentially facilitate repayments to scorned customers by offering them stakes in the new entity and distribution of its in-house token FTT.
- Currently, FTX is struggling to recover SBF’s ~US$93 million in political donations while it sells off assets (like derivatives exchange LedgerX) for pennies on the dollar.
Zoom out: If you’re wondering what that ‘lil rascal SBF is up to, a New York court ruled that he must face all of the 13 criminal charges brought against him, after he tried to avoid 10.
Bottom line: A reborn FTX would enter a new world where governments are now openly hostile toward crypto, lawsuits are plentiful, and regulation looms. Whether a biz like FTX could still thrive in this environment is a massive question mark.—QH