Bankrupt cryptocurrency exchange FTX has successfully regained over $7.3 billion in cash and liquid crypto assets, marking an increase of over $800 million since January, according to the company's attorney Andy Dietderich. He made the announcement during a U.S. bankruptcy court hearing in Delaware on Wednesday.
Dietderich revealed that FTX is now contemplating its future after dedicating months to amassing resources and determining the issues that arose under the guidance of indicted former founder Sam Bankman-Fried, who has entered a not guilty plea. Dietderich commented, "The situation has stabilized, and the dumpster fire is out."
The recent increase in cryptocurrency prices has aided FTX's recovery, Dietderich noted. If the company's total recovery were based on crypto prices from November 2022, it would be valued at $6.2 billion. FTX filed for bankruptcy that month after traders withdrew $6 billion from the platform in just three days, and competitor Binance abandoned a potential rescue deal.
John Ray, FTX's new CEO, has described the collapsed crypto exchange's improper fund transfers and inadequate accounting as a "complete failure" of controls.
As FTX evaluates its next steps, it is discussing with stakeholders the potential for relaunching its crypto exchange, with a decision possibly arriving within the current quarter, Dietderich said.
Dietderich provided little information on what a revival might mean for FTX customers whose crypto deposits have remained inaccessible during the bankruptcy case. Thus far, only FTX customers in Japan have been able to withdraw any funds, due to the nation's relatively robust crypto regulations.
Dietderich stated that significant capital would be required to restart FTX's crypto exchange, as the existing customer interface had minimal connection to the behind-the-scenes money movement. He described the situation by saying, "The app worked beautifully, but in truth, it was a facade."
Dietderich acknowledged that it is uncertain whether FTX should use its own funds to restart the exchange, rather than repaying customers. A relaunch might necessitate external funding or a sale of the exchange's assets.
FTX is also developing a preliminary Chapter 11 plan that could offer the company a route out of bankruptcy. Dietderich mentioned that FTX aims to file the plan by July, but many details must be resolved as creditors vie for a portion of the company's assets. FTX does not anticipate any Chapter 11 plan approval before the second quarter of 2024.
Bankman-Fried and several company insiders face fraud charges for their involvement in the company's collapse. While Bankman-Fried has pleaded not guilty, other former members of his inner circle have entered guilty pleas and agreed to cooperate with prosecutors.
