Attorneys for bankrupt crypto exchange FTX are considering restarting the crypto exchange after reporting that a significant amount of assets were recovered.
In a Wednesday court hearing, FTX’s lead bankruptcy attorney Andrew Dietderich disclosed that the firm was mulling reopening the crypto trading platform as part of a reorganization plan.
The exchange’s liquidators made major strides in their efforts to track down FTX’s missing funds, recovering $7.3 billion in assets, most of which are liquid. According to a presentation shared by Dietderich, these assets include $2 billion in cash and $4.3 billion in “Category A” crypto, like Bitcoin and Ethereum, which have a trading volume of at least $1 million.
A potential exchange restart will be assessed this quarter and could require raising additional capital. A “quick restart” could be possible through a 363 sale, which would involve the sale of the firm’s assets – essentially the money owed to creditors.
FTX’s bankruptcy estate is currently in talks with the exchange’s official committee of unsecured creditors about the exchange restart.
“There are as many opinions on this as there are professionals in this case, and that’s a lot,” said Dietderich.
Some industry watchers believe that the likelihood of the exchange reboot was slim, given the legal challenges the option presents.
ask yourself, would you risk substantial civil and criminal penalties for running a noncompliant exchange from burgerland or just continue billing the estate $30m a month risk free?
— Spreek (@spreekaway) April 12, 2023
Others opined that a restart under new leadership would be a positive development for the industry.
I 100% support the restart of FTX because without Sam and the shadiness of Alameda:
– it was a decent exchange
– lots of people will get a lot of their money back
And the most important aspect:
— Devchart 👨🏻💻 (@devchart) April 12, 2023
According to Dietderich, former FTX CEO Sam Bankman-Fried engaged in persuasive lies to stakeholders and customers “in order to maintain a digital con game.”
“[FTX] was a facade, a digital Potemkin village or, perhaps more apt, a video game,” he said, explaining the lack of adequate processes in place to reconcile trades and assets behind what was presented on the surface.