- An FTX attorney has said that the “dumpster fire is out” as the exchange eyes a return
- Andy Dietderich said in a recent court filing that the company has recovered cash and assets worth $7.3 billion
- It isn’t known whether the funds will re returned to creditors or used to relaunch the exchange
An attorney for collapsed exchange FTX has said that the road to recovery has started and that the “dumpster fire is out”, amid suggestions that the exchange could reopen later this year. Andy Dietderich said in a court filing yesterday that options for resuscitating the exchange were now being explored as it was also revealed that over $7.3 billion in cash and liquid crypto assets have been recovered for creditors, an increase of more than $800 million since January.
FTX Infrastructure Still in Place
Incumbent FTX CEO John Ray III hinted at the reopening of FTX in January, a suggestion that was met with scorn from most of the crypto community, but with the infrastructure still in place to smoothly operate the exchange, there is a strong case for doing so. One option would be to assign debtors a new exchange token that entitled them to a portion of the profits. This approach was adopted by Bitfinex following its 2016 hack and would help to make up some of the users’ shortfalls, although it’s not clear if this would pass securities laws.
$7.3 Billion Recovered
One issue with reopening the exchange in any form is, of course, money. Fortunately, the recent upturn in crypto prices has seen the cash valuation of FTX’s holdings hit $7.3 billion, although with some $8 billion owed to creditors, there won’t be much left over, especially once fees and other expenses are taken into account.
A decision is yet to be made whether FTX will allocate its own resources to revive the exchange or instead use those funds to repay customers. Dietderich added that restarting the exchange may necessitate external financing or the liquidation of the exchange’s assets, something that creditors would naturally not be best pleased with.
FTX is developing a preliminary Chapter 11 plan to provide the firm with a means of exiting bankruptcy, the details of which will be released in the coming months.