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FTX Rebirth: Who are the Three Bidders Trying to Restart Sam Bankman-Fried’s Empire?

Published November 1, 2023 2:14 PM
Teuta Franjkovic
Published November 1, 2023 2:14 PM

Key Takeaways

  • FTX is exploring various options for its potential comeback after facing bankruptcy.  
  • Options include selling the entire exchange, partnering with a suitable entity, or relaunching the trading platform independently. 
  • FTX’s administrators have made significant progress in recovering assets, with almost $7 billion retrieved.
  • While raising capital is a crucial aspect of FTX’s recovery, the process also involves financial and legal challenges.  

It seems there could be a light at the end of the tunnel for bankrupt exchange FTX after all – at least according to Kevin Cofsky’s testimony last week. 

Cofsky stated that the company is dealing with multiple possibilities and hinted that there are three bidders who have submitted their offers to FTX Trading Ltd. 

Considering Relaunch Choices and Investor Negotiations

The business’s investment banker, Kevin M. Cofsky of Perella Weinberg Partners, stated during a court hearing in Wilmington, Delaware, that the company will decide how to move by mid-December. According to Cofsky, FTX is negotiating the specifics of possibly legally binding proposals with investors. 

Cofsky said US Bankruptcy Judge John Dorsey that the exchange’s options included selling the entire thing, along with a valuable list of over 9 million clients, or enlisting the aid of a partner to assist it in getting back up and running. According to him, FTX is also considering relaunching the trading platform on its own. 

Cofsky said: “We are engaging with multiple parties every day,” without revealing the bidders’ identities. 

Ever since declaring bankruptcy the previous year, FTX has been attempting to generate capital to pay back creditors. According to court filings, the administrators of FTX have so far retrieved assets worth almost $7 billion, including $3.4 billion in cryptocurrency. 

The concept of a restart was originally mentioned earlier this year when Andrew Dietderich, lead bankruptcy attorney for FTX, said  in an April court hearing that the bankruptcy estate had recovered assets valued at $7.3 billion and that the company was considering the proposal.

Plausible Relaunching Plans

After multiple well-funded parties indicated interest in sponsoring the endeavour and attorneys representing the FTX bankruptcy estate included hour-long appraisals of the proposed relaunch as billable items, those plans started to look more and more plausible. 

FTX suggested using the revenues from the sale or recapitalization of the revived exchange to give creditors their money back in a reorganisation plan that was submitted in August. Even though the liquidators had stated that FTT would not be involved in the exchange restart, the announcement caused FTX’s native exchange token, FTT, to spike dramatically. 

The official committee of unsecured creditors (UCC) of FTX demanded at the time that they be the ones to determine who operates FTX 2.0 and that a “regulatory-compliant” recovery token be created for the new exchange. 

Beyond the Numbers: FTX’s Prospective Comeback 

There is more to FTX’s possible recovery than just its ability to raise enough money. The present board would have to get beyond a number of financial and legal obstacles.  

The announcement of a revamped plan that aimed to restore 90% of recovered assets to the affected consumers gave rise to the concept of FTX 2.0. This plan was to be presented to a US bankruptcy court and was created by John Ray III, the recently appointed administrator.

The proposal, however, does not guarantee a complete 90% recovery, and the actual payment is contingent upon a number of factors, including the court’s final approval and the ultimate amount of assets recovered. 

The financial difficulties go beyond figures. The plan must handle a number of compliance challenges, from token lockups to stringent anti-money laundering processes, in accordance with the rules of the United States Chapter 11 bankruptcy proceedings. Due to the sheer size of the undertaking, FTX will have to establish a strong foundation that guarantees openness, adherence to laws, and, in the end, the confidence of all parties concerned.   

Furthermore, the story of recovery revolves around credibility and trust rather than just numbers. Anthropic, a company that develops AI, had a 40% spike in share prices this year following multiple high-profile funding rounds, including investments from Google and other companies.

Being a significant Anthropic investor, FTX may be able to generate enough cash flow to reimburse its clients. 

FTX Group Reports Price Surges Amid Bidder Interest

The value of FTX claims has increased , according to Cherokee Acquisition, a company that brokers bankruptcy claims. The founder of the company, Vladimir Jelisavcic, states that these claims currently stand between 50 and 53 cents on the dollar. Interestingly, last week’s transaction of identical claims took place at a lower range—more precisely, in the mid-40 cent area. 

The anticipated payment for creditor claims against FTX had increased to an average of 37 cents on the dollar, according to a September report  published by Matrixport. This was a huge increase from just over 10 cents at the start of 2023, and at the time it was the highest level since the bankruptcy filing in late 2022.

A recent statement claimed that the liquidators, working with administrator John Ray, intend to return to FTX’s clients about 90% of the assets, or “distributable” value, that they are able to recover. 

John Dorsey, a federal court headquartered in Wilmington, Delaware, must receive the plan by December 16 in order for him to approve it. 

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