FTX to Restart Operations with $7.3B in Assets
- It’s uncertain whether Ray and the new management team will pursue a relaunch.
- Sam Bankman-Fried will go on trial in October after pleading not guilty to accusations of fraud and campaign finance violations.
- FTX’s debtors recently announced that a Swiss court had approved a petition permitting the sale of FTX Europe AG, the company’s European division.
- FTX filed for Chapter 11 protection in a U.S. bankruptcy court, along with 133 other subsidiaries, in November 2022.
The legal team representing FTX debtors claims that the cryptocurrency exchange could be contemplating restarting operations in the future. Attorneys with Sullivan & Cromwell representing FTX testified at a hearing on April 12 in the United States Bankruptcy Court for the District of Delaware that the cryptocurrency company had recovered about $7.3 billion in liquid assets.
According to a March filing from the debtors, the four FTX company silos had about $4.8 billion in scheduled assets as of November 2022, and an inquiry into the assets is still ongoing. The legal team claims that FTX plans to restart the exchange as early as April 2024.
In an interview with the Wall Street Journal in January, John J. Ray III, FTX’s new CEO, revealed that he was considering reopening FTX’s international exchange to recover value for customers and creditors.
Ray has spent decades guiding businesses through bankruptcy, including Enron Corp. He labeled FTX, however, as the worst corporate governance failure he had ever witnessed. The exchange’s crash left creditors with claims of at least $11.6 billion, disrupted the market, and had long-lasting effects on the industry. A restart would be challenging in the face of those difficulties.
Bankman-Fried Plea for Legal Fees Dismissed
The bankruptcy judge also rejected a motion that would have authorized the court to prioritize paying Sam Bankman-Fried’s legal fees. The judge, however, left the possibility open for the embattled 31-year-old to later provide the court with proof relevant to the motion.
Denying the motion, Judge John Dorsey said,
Frankly, I have zero evidence to establish cause here. Mr. Bankman-Fried did not put out any evidence whatsoever as to the balancing of the equities here, what harm is going to occur to him. I don’t know what other insurance policies he has access to, I don’t know what other assets he has access to privately that would allow him to cover these costs and then recover them later under this policy.
A recent report by FTX’s debtors claimed the exchange’s downfall was mostly caused by poor management skills and control. The report revealed that Bankman-Fried has little or no measures to protect users’ funds and enforced strict measures against employees who oppose his views.
The 31-year-old former FTX CEO is currently awaiting his trial, which is scheduled for October 2023.
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