Bold as it sounds, FTX is exploring the possibility of restarting its business. The failed exchange managed to recover $7.3 billion, a majority of assets owed to customers, and plans to reorganize to reboot its operations. After the news was revealed by Andy Dietderich, the company’s bankruptcy attorney, at a Wednesday court hearing, the price of the FTX Token (FTT) surged by nearly 110% to $2.74 from $1.31.
The assets recovered by FTX include cash, crypto, and securities. It’s a significant addition to the $5.5 billion located in January, although the overall value of the amount varies depending on the fluctuations of crypto prices. At the time of January’s press release, Bitcoin’s value stood at approximately $21,000 and has risen to over $30,000 since.
It’s not impossible that the company satisfies the creditors’ claims solely by way of cryptocurrency appreciation, which would be reminiscent of the Mt. Gox case. The bankrupted Tokyo exchange managed to recover only a fraction of lost assets. Nevertheless, its creditors were eventually more than compensated, thanks to the growing price of Bitcoin.
Even if this history repeats itself in the FTX case, it’s hard to imagine how the exchange rebuilds its reputation. The situation around the failed giant has stabilized, but it’s far from solved. “We will be increasing distributable assets – hopefully dramatically – as the case progresses, but it’s also important not to lose what we have now,” said Dietderich at the hearing.
The possibility of reopening FTX was already hinted at in January. John J. Ray III, Sam Bankman-Fried’s successor as the platform’s CEO, said in an interview that he had set up a task force to explore restarting the company’s main international exchange. He argued that customers were happy with the platform’s technology and might embrace its comeback.
The discussion around the company’s reboot has begun only recently. Decisions may be expected in the second quarter of 2024 at the earliest.