Rumors surfaced towards the end of this week that FTX could relaunch. The company is reportedly working with stakeholders on a path to restarting the exchange, and could reach a decision on that move this quarter, according to FTX lawyer Andy Dietderich.
However, FTX would “need substantial capital to restart, as its existing customer interface was barely connected to the behind-the-scenes movement of money”, Dietderich told a federal bankruptcy court in Delaware.
FTX’s native token FTT surged 100+% mid-week on the speculation.
Emojis
The collapse of FTX in Novermber 2022 had an impact on the whole crypto industry and all those with a stake in it. Institutions from Wall Street banks to government agencies were among those impacted.
An FTX debtor report released recently and reported on by The Wall Street Journal said the company’s failures were due to “hubris, incompetence, and greed,” adding “multimillion dollar expenses were approved with a simple emoji”.
“FTX would need substantial capital restart, as its existing customer interface was barely connected to the behind-the-scenes movement of money.”
Andy Dietderich, FTX Lawyer
The report said that under the direction of former leadership, FTX and its affiliated entities lacked the appropriate management, governance and organizational structure necessary for its size, as well as the financial and accounting controls needed for a multibillion-dollar firm.
A new management team is led by CEO John J Ray III, a seasoned manager with four decades’ experience handling corporate scandals. The Financial Times described Ray in December as a “firefighter drafted in to quell the FTX crisis,” saying he may now “be facing his toughest task yet”.
Some $7.3bn in assets has reportedly been recovered, FTX lawyers told the court. The company now reportedly has $5bn in cash, digital assets, and investment securities. “The situation is stabilized and the dumpster fire is out,” Dietderich said.
Restructuring
FTX lawyers speculated there could be a final restructuring plan approved by the court in the middle of 2024, roughly 18 months after the company had succumbed to a bank run from account holders.
Sam Bankman-Fried himself asked the court to permit him to access a company insurance policy for FTX officers that would help pay his legal expenses, but this was denied.
“We sometimes find $50m of assets lying around that we lost track of; such is life,” Bankman-Fried was quoted as saying in the report. SBF had requested that a $10M insurance policy taken out by FTX just before its bankruptcy be used to cover his legal expenses. A judge will soon decide whether to lift a suspension that would allow insurers to assess whether Bankman-Fried is covered.
