FTX 2.0: Creditor Refunds May Depend on SBF’s Stricken Exchange Rebooting Under John Ray III
Who guarantee FTX customers will get their funds back? | Credit: Shutterstock
- The probability of an FTX reboot under the new name FTX 2.0 has emerged a few months ago
- John Ray III, the newly appointed CEO of FTX, is billing for work signed with “2.0”
- IRS filed 45 claims worth $44 billion against FTX, demanding its money back
The probability of an FTX reboot under the new name FTX 2.0 and the new CEO John Ray III, emerged a few months ago and drew a lot of attention from the crypto community.
Even though FTX, started as a rather frivolous exchange, it soon became one of the biggest exchanges for investors to consider before ending up bankrupt after being badly managed. Client money was being used for risky market investments via the adjacent Alameda fund.
However, the company itself was profitable, and because of it, its re-launch is now under serious consideration.
John Ray III is the man charged with cleaning up the mess FTX’s founder and former CEO, Sam Bankman-Fried, has made. With plenty of ex-clients who are left without compensation and the balance sheet gap that stands at approximately $6.8 billion , the idea of rebooting FTX was explored as one of the easiest ways to a faster recovery of clients’ funds.
Forming of the FTX 2.0 Coalition
Dubbed FTX 2.0 Coalition, this group quickly became a noteworthy organization behind the main idea of relaunching the bankrupt exchange.
We are proud to announce the formation of an FTX 2.0 Coalition, started by @loomdart and @AFTXcreditor .
Growing the idea and ethos of FTX 2.0, we advocate for a restart of FTX to make users more than whole and build a better, safer exchange for everyone.https://t.co/4Tnl6hYrlB pic.twitter.com/l8sZnqKqdj
— FTX 2.0 Coalition (@AFTXcreditor) May 14, 2023
Some key players in the crypto space share the belief that FTX 2.0 gives at least the possibility for the clients to recover their lost funds. Furthermore, it serves to challenge Binance’s monopoly of the crypto market and make room for the development of new, unique solutions. The coalition is inspired by other successful stories, such as Bitfinex, where clients managed to recover their funds.
Additionally, it was noticed that John Ray III, the newly appointed CEO of FTX, is billing for work different from his usual tasks for the company, signing it with a “2.0” ticker.
Even though no one has confirmed the exchange being relaunched, Ray III and FTX lead attorney Andy Dietderich, both have mentioned this possibility in previous months
The announcement of the FTX 2.0 possible re-launch had an immediate impact on the market and made FTX exchange native token, FTT, jump over 24% at its peak.
Who is John Ray III
John J. Ray III is an acclaimed American lawyer and an expert in recovering funds from failed corporations. Just for comparison, he led the efforts to recover creditors’ assets after Enron collapsed back in 2004.
Ray III was appointed as the CEO of FTX following the exchange’s breakdown in November 2022, and is currently doing due diligence of the collapsed exchange to put it back on its feet if possible.
Be that as it may, it was noticed he spent a few extra hours in April on some chores that might be connected to an FTX potential relaunch.
In the monthly staffing report and compensation report released on May 22, there are references found, commenting on “2.0 next steps,” “2.0 reboot,” “2.0 communications,” “2.0 bidder list” and “FTX restart.”
How the New FTX 2.0 Would Work?
There are two main ideas of how the newly set exchange would work. One includes outsourcing custody to a qualified custodian and the other suggests implementing trade settlement (e.g., T+2) combined with customer-specific segregated multi-sig addresses. After a trade settles from the exchange’s address to multisig, funds couldn’t be moved without user permission.
The coalition also suggests offering free tokens . According to them: “bankruptcy estates that offer a Recovery Token will benefit from market inefficiency. DOGE and SHIB are worth nearly as much as COIN: ~$16 billion. The ability to issue a Recovery Token for free is powerful and can make creditors whole.”
Will There Be Compensation?
On May 10, 2023, IRS filed 45 claims worth $44 billion against FTX, and that complicated the whole thing even more. Because the United States Government obviously wants to get paid out first, it remains to be seen whether FTX 2.0 will really see the light.
It also remains uncertain whether the creditors will receive any compensation from the potential reboot of FTX or when.
Conclusion
FTX 2.0 has caught the attention of crypto enthusiasts as it may spark a potential restart of the crypto exchange industry.
Ex- Enron attorney, John Ray III, is, for now, successfully leading the way in attempting to FTX back to functionality, aiming to offer customers a better experience and challenge Binance’s dominance.
However, success hinges on factors such as rebuilding trust, dealing with falling volumes, and handling complicated financial disputes.
The crypto community is, for now, closely monitoring FTX’s progress. Some are optimistic, while others are skeptical of the exchange’s ability to make a comeback.
Time will tell if FTX 2.0 is the key to revitalizing the crypto exchange industry.
