FTX Could Reopen?

In a court hearing on April 12 Andy Dietderich, the lead FTX attorney from Sullivan & Cromwell, told that re-starting the exchange can be one of the potential options for the future of the company. In this case, the FTX's creditors could convert a portion of their holdings to a stake in a reopened exchange, so that customers could receive some kind of interest in the exchange going forward. Well, we agree that “it would at least provide some value (no matter how small) to creditors," as Zane Tackett former FTX Head of Institutional Sales said.

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If the plan gets accepted and everything goes properly, it can provide immediate liquidity to those who want to sell off their claims (for example on a newly launched OPNX which offers claims trading) and would give others a chance to win a bigger prize if FTX 2.0 succeeds.

However, the attorney outlined that this is just one of many possibilities, and there is no final decision, the exchange token surged and almost doubled its price after the hearings.

FTX creditors' committee tweeted that they are working on evaluating all options to create value for creditors and added that there is no definitive timetable for a reboot or sale and that parties interested in purchasing or sponsoring a reboot of the FTX exchanges should contact the Debtors and the Committee.

The idea of restarting FTX is not new. Earlier in January FTX’s new chief executive, John J. Ray III, said he was looking into the possibility of reviving the bankrupt crypto exchange and set up a task force to explore restarting FTX.com.  According to him, some customers have praised the exchange technology and there would be value in rebooting the platform, despite all the troubles. We should outline that there were and there are a lot of opposite opinions on FTX’s performance. For example, Mike van Rossum, founder and CEO of trading firm Folkvang called it the slowest exchange to be traded on.

Besides the widely discussed piece of news about FTX restarting,  the lawyers also said the exchange had recovered roughly $7.3 billion in liquid assets while a March filing from the debtors reported the company had around $4.8 billion in scheduled assets as of November 2022, when the exchange collapsed. The investigation into the assets is still ongoing.

The next hearing is expected to happen on May 17. We’ve saved the date and will continue to observe with genuine interest.

Would you give FTX a chance if it restarts? Looking forward to your comments!