FTX token jumps after new CEO says failed crypto exchange could restart
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FTX would likely face a backlash if there was an attempt to relaunch.
PHOTO: REUTERS
New York – FTX’s controversial FTT token surged after the bankrupt company’s new chief executive, Mr John Ray III, said that he is exploring the possibility of restarting the crypto exchange.
Data from TradingView shows that FTT rose by more than 30 per cent on rival exchange Binance. FTT was trading at around US$2.38 on Thursday. This is still down more than 97 per cent from its record high of US$84.18, according to pricing data from CoinGecko.
Mr Ray told the Wall Street Journal in an interview that a relaunch is one option under consideration as he works to return money to FTX’s customers and creditors. A task force has been set up to explore restarting FTX.com, he said.
Representatives for FTX declined to comment to Bloomberg News on the article or the surge in FTT.
Besides being reopened briefly to allow United States investors to repatriate their funds, FTX would likely face a backlash if there was an attempt to relaunch, according to Duke University finance professor Campbell Harvey.
“The brand is toxic,” Prof Harvey said. “It is a classic situation where you fooled me once, shame on FTX; but if you fool me twice, it is all on me.”
FTX is currently in Chapter 11 bankruptcy, a legal process that gives companies protection from creditors while hashing out a restructuring plan. Companies in Chapter 11 typically explore any and all turnaround plans that will maximise recoveries for creditors.
FTT was at the crux of the collapse of FTX. Like many so-called native tokens, the cryptocurrency was used in part as an incentive to draw transactions to the exchange by providing discounts to its holders. The use of FTT did not appear to be a problem until it was revealed that FTT was not only one of the main assets that made up FTX’s balance sheet, but also used as collateral by Alameda Research accessing capital through both centralised and decentralised lenders.
“I encourage Mr Ray to turn back on the exchanges and return customer assets as soon as possible. FTX US is solvent,” former FTX CEO Sam Bankman-Fried said through a spokesman on Thursday.
Bankman-Fried has been charged with eight criminal counts, including conspiracy and wire fraud, for allegedly misusing billions of dollars in customer funds before November’s spectacular collapse of his cryptocurrency empire. He has pleaded not guilty. BLOOMBERG
