Cryptocurrency exchange FTX may not be dead.
The platform, the flagship company of Sam Bankman-Fried’s crypto empire, could be relaunched in the coming months.
So said John Ray, the chief executive appointed Nov. 11 when the Bankman-Fried empire filed for bankruptcy, to handle the liquidation.
In his first public interview, Ray spoke to The Wall Street Journal, saying some FTX executives, customers and investors are praising FTX technology despite criminal charges filed against founder and former CEO Bankman-Fried.
Clients therefore suggest there would be value in restarting FTX, the bankruptcy restructuring veteran said.
“Everything is on the table,” Ray told the Journal. “If there’s a path forward on that, then we’re not only going to explore it, we’re going to do it.”
Ray and Bankman-Fried swap beards
Ray is best known for piloting the bankruptcy liquidation of energy broker Enron.
The final decision will depend on whether the relaunch of FTX allows customers and investors to recover more of their funds or whether the liquidation of assets or even the sale of the platform is more beneficial to lenders.
The new FTX CEO also made fresh criticisms of the behavior of his predecessor, who had indicated in media interviews and recent posts that filing for bankruptcy was not the only option for FTX.
“We don’t need to talk to him,” Ray said, referring to Bankman-Fried. “He hasn’t told us anything that I don’t already know.”
Bankman-Fried immediately retorted: “This is a shocking and damning comment from someone pretending to care about customers,” the former trader told the Journal in a text message.
“Despite its insolvency and despite processing approximately $5 billion in withdrawals in the last few days of business, FTX International holds significant assets – approximately $8 billion in assets of various liquid assets as of Mr. Ray took over” he said on Jan. 1. 12 without going into detail.
“Beyond that, there were numerous potential financing offers, even signed ones [letters of intent] after filing Chapter 11 for a total of more than $4 billion. I believe that if FTX International had been given a few weeks, it could probably have used its illiquid assets and equity capital to raise enough finance to make clients essentially whole.”
FTX was valued at $32 billion last February.
NFL star Tom Brady was a major shareholder and ambassador for FTX, which he advertised in commercials with his ex-wife Gisele Bundchen.
The former couple separately owned a large share of the company. Brady held 1.14 million shares of FTX Trading common stock, while Bundchen was a shareholder with 686,761 shares, according to court documents.
Bankman-Fried is under house arrest
The firm and its subsidiary Alameda Research, a hedge fund and trading platform, went bankrupt after their respective clients scrambled to withdraw their money by selling the cryptocurrencies they had previously bought.
FTX used client cryptocurrencies as collateral to borrow money, which it in turn transferred to Alameda Research with which it shares several connections. Alameda used this money to invest in crypto assets and also for trading operations.
Ray and his team have painted an unflattering picture of the Bankman-Fried regime.
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of reliable financial information as occurred here,” Ray wrote in a 30-page document filed in US Bankruptcy Court for the District of Delaware in November .
“From compromised systems integrity and faulty regulatory oversight overseas, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”
The Justice Department and the Securities and Exchange Commission have filed a series of criminal and civil charges charging Bankman-Fried with fraud.
“Bankman-Fried was orchestrating a massive, years-long fraud by diverting billions of dollars of trading platform customer funds for his own personal benefit and to help grow his crypto empire,” the SEC says in its civil complaint.
He was released after his parents, both law professors at Stanford University, signed a $250 million recognition bond pledging their California home as collateral. Two other friends with significant assets have also signed, according to reports.
During a January 3 hearing in US District Court in New York, Bankman-Fried pleaded not guilty.
The trial is scheduled for October 8.