FTX explores restart of bankrupt cryptocurrency exchange
FTX studied the restart of a bankrupt cryptocurrency exchange
Lawyers assessed potential security concerns and tax issues that could arise when restarting the crypto platform
Lawyers from Sullivan & Cromwell, representing FTX, have been looking into issues related to the potential restart of the bankrupt exchange, at the request of its management. Bloomberg reported this, citing the law firm's monthly fee reports.
Sullivan & Cromwell's bill for February was $13.5 million, including fees for considering "long-term options" for the exchange, the publication writes. One report mentions an analysis of "potential security concerns related to a possible FTX relaunch." Another mentions discussions with cybersecurity firm Sygnia about a possible restart of the exchange.
The attorneys analyzed "a possible re-launch of the exchange and related tax circumstances, including tax regulations in the U.S. jurisdiction." They also corresponded with the head of the exchange, John Ray, about "creating a mock-up of the exchange to test the user experience."
In January, Ray said he was considering restarting FTX.com in order to recoup losses from creditors and customers. According to the latest data, the exchange owes about $11.6 billion to creditors, of which only $2.8 billion has been found so far by exchange managers. FTX was founded by Sam Bankman-Fried, who is facing fraud charges.
"Reputation is the worst." How the restart of the FTX exchange might go
According to former FTX top executive Zane Tackett, quoted by The Block, the platform should be restarted and offer customers all of the products that were available on it before it closed, as well as release a token representing the claims of creditors.
Tackett cited that when BFX was credited to the accounts of all affected customers - each token represented $1 in losses. The move helped the platform recoup all of its customers' losses a year after the incident.
However, Tackett said success will depend on how the exchange relaunches. If it is "an over-regulated, managed and U.S.-based platform that doesn't allow for innovation or products that originally attracted users," he said, it is doomed to fail.