In a court hearing on Wednesday, FTX’s attorneys from Sullivan & Cromwell stated that the cryptocurrency exchange, which crashed spectacularly in November, is thinking about reopening in the future while it navigates bankruptcy.
The possibility of allowing FTX’s creditors to convert a part of their assets into shares of a reopened exchange was considered.
After the news, the price of FTX’s FTT token more than doubled.
The exchange’s restart was one of several potential possibilities being evaluated for the company’s future, lead FTX attorney Andy Dietderich told the court.
If that course is chosen, according to Dietderich, a sizable amount of finance would need to be obtained for the plan, and it is being debated internally whether that funding should come from the FTX estate’s assets or outside sources.
According to Dietderich, “There are possibilities that customers could have the option to take part of their proceeds that they would otherwise receive in cash from the estate and receive some kind of an interest in the exchange going forward.”
He provided very little information about what a reboot may entail for FTX clients whose crypto deposits were frozen throughout the bankruptcy proceedings.
The lawyer emphasized that, even so, resuming FTX is only one of many potential outcomes and that no decisions have yet been made. As many specialists are involved in this matter as there are viewpoints on this, according to Dietderich. That’s a lot, too.
Due to Japan’s somewhat strict cryptocurrency legislation, only FTX consumers in that nation have been able to withdraw money thus far, according to Dietderich.
The attorney claimed that FTX would require a sizable sum of money to resume its cryptocurrency exchange.
Also, the FTX lawyers informed the court that they had recovered $7.3 billion in liquid assets from the bankrupt exchange, an increase from the $1.9 billion total reported in January. They continued, though, that FTX is still “far from an equity distribution.”
According to Dietderich, FTX is also putting the finishing touches on a tentative Chapter 11 plan that would give the business a way out of bankruptcy.
The plan would be submitted by FTX by July, but the business admitted that many specifics would need to be sorted out as creditors compete for their fair portion of the company’s assets. The second quarter of 2024 is the earliest that FTX anticipates any Chapter 11 plan to be approved.