Bankruptcy FTX Lawyers Consider Restarting Exchange
You know that classic zombie movie scene where everyone thinks the monster is dead, but suddenly it’s not?
FTX, the bankrupt crypto exchange that imploded last year, has recovered more than $7.3 billion in cash and cryptocurrency assets, company attorney Andy Dietderich said during an interview. a court hearing on Wednesday, according to a report from Reuters. That number is up more than $800 million from January’s recovery statistics, Dietderich added.
He attributed the increase, in large part, to the overall increase in cryptocurrency values since last fall. Bitcoin prices, for example, are still falling more than 26% at this time last year, but up from more than 56% in the last 6 months, at the time of writing.
The attorney noted that with its coffers growing back, FTX’s new management is beginning to consider redoingstart the exchange. “The situation has stabilized and the dumpster fire is out,” Dietderich reportedly told Delaware Chancery Court.
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So, will FTX Customers recover their lost funds? According to the Reuters report, the answer remains unclear. The deceased, mismanaged crypto company missing approximately $9 billion in customer funds. American depositors have yet to see this money returned to them. Of all FTX Affiliate Subsidiaries and Exchanges, only FTX Japan released client funds due to Japan’s strict crypto regulations. Elsewhere, depositors who lost their money were left uncompensated.
And either way, the decision of whether or not the remnants of FTX should return those funds to those rejected by the company or return to business is a tough one for FTX’s new management.
“It is not clear whether FTX should use its own funds to restart the exchange, rather than using the money to refund customers, Dietderich said. Restarting the exchange may require outside funding or a sale of the exchange’s assets,” Reuters wrote.
Coming out of bankruptcy does not necessarily require FTX to return client funds. Other latest crypto bankruptcy rulings released companies from this obligation. But FTX must repay its many debts to creditors (including Margaritaville and Doordash). To do this, the company will likely need even more capital than it currently has.
Meanwhile, Sam Bankman-Fried (AKA SBF), the exchange’s fallen co-founder and former CEO, is still awaiting trial on 13 charges of fraud, conspiracy and campaign finance– for which he pleaded “not guilty”. Other former FTX execs Nishad Singh, Caroline Ellison and Gary Wang also was charged with fraud. All three pleaded guilty.
