FTX Reportedly Considering Bids to Restart Exchange, Decision Expected by Year End

Is FTX going to be back soon?

The cryptocurrency exchange and crypto hedge fund company, FTX which collapsed in November 2022 following a liquidity crisis are now considering three proposals from different bidders to revive the platform, according to a recent report from Bloomberg.

At a court hearing which was held on Tuesday in Wilmington, Delaware, Kevin Cofsky, the investment bank Perella Weinberg Partners’ partner stated that the company has been contacting interested parties to discuss the revival of the exchange. In his words, “We have been engaging in an outreach process with a number of interested parties to either acquire the legacy exchange assets and/or to partner with the debtors in connection with a launch of the exchange. We’ve been evaluating that process relative to the potential to reorganize the assets on a standalone basis.”

According to credible sources, FTX hopes to reach an agreement with one or more of the prospects by the end of the year, after which a relaunch can happen in early 2024. According to FTX attorney Andrew Dietderich, the company was also able to settle significant disputes with its creditors, while also successfully filing a proper payout plan in December.

FTX Three Different Bids for Re-launch Plan

As the company seeks to bounce back from its financial predicament, three main options are being considered:

Selling the Entire Platform: One possibility is selling off the entire trading platform. This would also involve the transfer of its expansive user base, which boasts over nine million customers.

Seeking a Strategic Partnership: Alternatively, FTX might opt for forming a strategic alliance. This would involve partnering with another entity to facilitate and ensure the successful re-launch of the exchange.

Going Solo: According to Mr. Cofsky, a solo reboot of the platform is also a possibility. “We are engaging with multiple parties every day,” he said, though he kept the names of potential bidders under wraps.

This push towards rejuvenation started with a draft plan FTX presented in late July. The plan not only proposed a division of creditors into distinct claimant groups but also hinted at the potential for one of these groups to revive the dormant exchange with backing from external investors.

However, it’s essential to understand the backdrop against which these negotiations are taking place.

The decline of FTX began with the resignation of its co-founder, Sam Bankman-Fried, from his role as Chief Executive in 2022. This departure was a significant blow to the company, which had to halt its trading operations due to its unstable financial condition.

Bankman-Fried’s legal troubles have only compounded the situation. He is currently awaiting trial in New York, facing accusations of misusing FTX customer funds by redirecting them to a separate entity he controlled. The allegations state that he used these funds for high-stakes trading, making significant political donations, and buying lavish properties. Such actions are believed to have played a role in the downfall of both businesses.

In light of these circumstances, the future of FTX remains uncertain, but the company’s intent to revive and restore its operations is very clear.