FTX CEO Explores Exchange Reboot To Recover Value For Creditors
- FTX is exploring restarting the bankrupt cryptocurrency exchange to recover value for creditors and customers.
- FTX’s lawyers have been assessing tax issues and cybersecurity implications, as well as testing user experience, with a bill of $13.5 million.
- The new management team is committed to creating as much value as possible for FTX’s creditors, and the lawyers are working diligently to assess the feasibility of restarting the exchange.
FTX’s new CEO, John J. Ray III, is exploring the possibility of restarting the bankrupt cryptocurrency exchange, FTX.com, in an effort to recover value for creditors and customers, as per Bloomberg.
Ray, who has steered companies, including Enron Corp., through bankruptcy, called this the worst failure of corporate controls he had ever seen. However, he remains committed to creating as much value as possible for FTX’s creditors, which could include assessing whether a revival of the exchange would be preferable to simply selling assets.
To make this effort possible, FTX’s lawyers have been assessing tax issues and cybersecurity implications, as well as testing user experience, with a bill of $13.5 million for tasks ranging from recovering billions of assets to cooperating with law enforcement. The lawyers have been working on a variety of issues related to the effort, including analyzing potential security concerns and corresponding with cybersecurity firm Sygnia Inc. on potential reboot issues.
One fee was to “analyze possible re-establishment of exchange and associated tax consequences, including US taxing jurisdiction.” Other tasks in February included email exchanges with Ray and other advisers on the “creation of mock-up exchange to test user experience.”
With compliance and risk-management deficiency, building an exchange is extremely challenging. According to Daniel Tramel Stabile, a law firm Winston & Strawn LLP partner who co-leads its digital assets group and isn’t involved in the FTX reboot effort, “A restart would be complex.” It’s unclear whether the new management team will ultimately go forward with restarting the exchange or whether the restart is a limited effort for processing withdrawals. The FTX debtors’ group declined to comment on whether the exchange is planning to reboot. Sullivan & Cromwell, and Sygnia didn’t respond to requests for comment.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Join us to keep track of news: https://linktr.ee/coincu