Until not long ago, FTX was the third largest cryptocurrency trading marketplace in the world. The debacle that it suffered in November 2022 caused the company to declare bankruptcy and begin a long string of investigations that uncovered the bad practices of the company and its CEO, Sam Bankman-Fried. The impact on the financial market and of course on the crypto segment was enormous, but now FTX seems ready to rise from its ashes.
What happened. As indicates Reuters, FTX has recovered more than $7.3 billion in cash and crypto assets, an increase of more than $800 million since January. Andy Dietderich, a lawyer for the company, explained in a court appearance that “the situation has stabilized, and the fire has gone out.” The company is just beginning to consider what it does in the future, and one of the options is, to say the least, surprising.
FTX could be reborn. This exchange or cryptocurrency market is negotiating with investors the options of a potential reappearance with the same activity, and they may make a decision on it this quarter.
How is it possible. FTX has benefited from recent rallies in the cryptocurrency market. The new CEO of the company, John Ray, detailed how various transfers of funds and poorly managed accounting led to the collapse of the entity. According to him, there was a “complete failure” of the controls that protected the entity.
Shouldn’t they pay the money back first? The funny thing is that the company owes a lot of money: a November investigation revealed For example, it owed 3.1 billion dollars to its 50 main creditors, while the total deficit was around 8 billion dollars. The company did not give details about what this return to activity would mean for former FTX clients. The crypto deposits of all of them have been blocked during the bankruptcy investigation. Only FTX clients in Japan have been able to withdraw funds thanks to the country’s regulation.
they would need a lot of money. In order to get back into business, FTX would need a large injection of capital. If the value of cryptocurrencies continues to rise that would help, but it’s unclear if the company would use its own funds to restart back on the market. According to Dietderich, that could involve outside funding or the sale of company assets.
And meanwhile, they continue in technical bankruptcy. The surprising thing about the case is that FTX has been immersed in its technical bankruptcy declaration. Those responsible are working on a plan within the well-known Chapter 11 that allows companies to declare bankruptcy and then restructure and try to return to activity. They are expected to finalize that plan in July, but approval would likely not come until the second quarter of 2024.
