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FTX 2.0: Rising from the Ashes with Stablecoin Play?

Last Updated October 30, 2023 12:05 PM
Teuta Franjkovic
Last Updated October 30, 2023 12:05 PM

Key Takeaways

  • FTX’s brand is ruined, but hope for FTX 2.0 remains: is FTX’s brand beyond recovery?  
  • Creating a stablecoin could still hold promise if it meets regulatory standards. 
  • Are regulators moving to ban wash trading in the cryptocurrency market?

Stories regarding the possibility of the new FTX concept proudly called FTX 2.0, emerged last month, and allegedly, the FTX estate has reached out to over 75 bidders since May to ascertain the level of industry support for the exchange’s restart.  

However, even if that happens, the question remains: Is the brand completely ruined? Crypto expert David Lesperance thinks it is. 

FTX’s Future After a Ruined Brand – Stablecoins? 

Kevin Cofsky , a partner at Perella Weinberg Partners and investment banker, was one of the prominent individuals scheduled to testify last week in the FTX trial. His significant involvement in the proceedings has brought him to the forefront of attention. 

Cofsky then said  that in the event of a reorganization, creditors may wind up with a stake in FTX. As their fees would be going towards a firm they own a portion of, in this case, they would have a stake in trading on the platform.

Additionally, Cofsky gave assurances that any restructuring would follow legal requirements and offer a safe, first-rate trading environment. 

CCN spoke with crypto legal expert David Lesperance who claims that FTX 2.0 will not happen since the “brand is ruined”.  

However, he says, there can be a future for it.  

“I don’t think it’s going to be FTX because I think the the brand is useless but I think they’ll take the concepts of it” 

“If I was the next person to create this, what I would do, is ask myself what were the good things that that FTX was doing, versus the bad ones,” he commented. 

One of the “good” things, Lesperance said, may be stablecoins. 

The CEO of FTX, Sam Bankman-Fried, mentioned  the possibility of FTX developing a stablecoin in October 2022. 

Back then, margin trading was available on FTX, and users could utilize a variety of stablecoins denominated in US dollars as collateral. TrueUSD (TUSD), USD coin (USDC), Pax dollar (USDP), HUSD, and Binance USD (BUSD) were all included in the basket. 

“What I think is the concept of a stablecoin is a part of that bridge between Fiat and crypto. Tether was something that has the assets and is not being audited,” Lesperance stated. 

“The irony is of course now that the SEC is going after that. But I think the Winklevoss , for example, with the concept of Gemini and having a US SEC compliant idea got a little crazy with Gemini cash. But you know, if you stick with that – it could be good.” 

Lesperance also mentioned CZ Zhao, the head of Binance, saying that his “I’m going to make money not with wild speculation” philosophy was good for getting such mass volume. 

Beware the Impending Wash Trading Ban 

The good thing about crypto, continued Lesperance was the fact it wasn’t considered – wash trading. 

Generally, a trader who engages in wash trading purchases and sells the same item to mislead the market. This is a practice in which a broker and a trader conspire against one another. Nevertheless, an investor may also take on the roles of both the buyer and the seller. 

Therefore, said Lesperance, “I think they’re going to ban wash trading on crypto. But right now there is a loophole. They just haven’t applied the regulation to this because they hadn’t defined it yet,” he explained. 

“Clearly as a security, it applied to a security. But now they will say crypto – we’ll include it in the group of things that you can’t do a wash trade on,” Lesperance said. 

However, he warns, “That doesn’t mean you can’t tax harvest. It just means you can’t turn around and sell it today, realize your loss, get a new cost basis, and buy it to buy the same thing tomorrow.” 

FTX Brand: A Casualty of Crypto History, Assets Seek Redemption

Lesperance claims that the new CEO of  FTX 2.0, John Ray III, may be old school but he has done an excellent job of sifting through the rubble of FTX to find recoverable assets.

However, while SBF may have bought growth investments like Anthrophic or enduring assets like Bahamian real estate, one asset that he appears to have killed is the FTX brand.

Although highly recognized, FTX’s name is known for all the wrong reasons. A more reasonable guess is that a new exchange will use some of FTX’s more attractive features and recoverable assets such as its customer list. 

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