New FTX CEO claims bankrupt crypto exchange could reopen

New FTX CEO claims bankrupt crypto exchange could reopen

FTX’s new chief executive, who took control of the bankrupt crypto exchange from disgraced founder Sam Bankman-Fried, has raised the possibility of the business reviving.

John J. Ray III, a respected attorney who oversaw Enron’s liquidation and acquired FTX in November, addressed the possibility in surprising comments to The Wall Street Journal Thursday.

Ray’s primary role in overseeing the bankruptcy is to return maximum value to creditors stiffened by FTX’s collapse, and he must now assess whether reopening the exchange would pay off more debt than liquidating the company.

“Everything’s on the table,” Ray said. “If there is a way forward [reopening the FTX exchange]then we’re not just going to explore it, we’re going to do it.’

FTX’s implosion last fall left customers and investors in the billions, and Bankman-Fried has been criminally charged over allegations that he misappropriated funds to shore up his hedge fund and to make lavish real estate purchases and political donations.

John J. Ray III, CEO of FTX, which took control of the bankrupt crypto exchange from disgraced founder Sam Bankman-Fried, has raised the possibility of the business reviving

FTX's implosion last fall caused clients and investors to lose billions, and Bankman-Fried (center) faces criminal charges over allegations that he embezzled funds

FTX’s implosion last fall caused clients and investors to lose billions, and Bankman-Fried (center) faces criminal charges over allegations that he embezzled funds

As a result, Ray was tasked with guiding the company through bankruptcy, identifying and securing assets that can be used to indemnify creditors whose claims against the company total billions.

Ray told the Journal he had set up a task force to investigate the reboot of FTX.com, the company’s main international exchange.

The task force is evaluating whether reviving the stock market would generate more value for the company’s clients than his team could achieve by simply liquidating assets or selling the platform.

Bankman-Fried, the founder and former CEO of FTX, has been accused of stealing billions of dollars from the exchange’s clients to shore up his crypto-focused hedge fund, Alameda Research. He has pleaded not guilty to the fraud charges.

The future of customer funds and how much customers who have lost their deposits could be refunded remains unclear.

“Crime is very expensive. It does a lot of harm to people,” Ray told the Journal. “And one of the harms is that people like me have to come and fix it.”

Court records show that Ray is making $1,300 an hour for his work overseeing the FTX bankruptcy. That money and other fees associated with the team overseeing the restructuring come from the pot that would otherwise be used to pay creditors.

FTX.com's website is currently showing this message, but Ray raised the possibility that the exchange could reopen

FTX.com’s website is currently showing this message, but Ray raised the possibility that the exchange could reopen

Earlier this week, FTX said in a report to creditors that amid the chaos since its bankruptcy in November, hackers have stolen about $415 million in crypto from its international and US exchanges.

Ray’s team previously said in court filings that they located $5 billion in cash and a $4.6 billion investment portfolio that can eventually be used to pay creditors.

However, it’s unclear how much of the book value of the investments, which are mostly stakes in smaller start-ups, can be recovered in cash.

FTX has said it owes more than $3 billion to its top 50 creditors, but the number of smaller creditors could be in the millions, and their total claims are unclear.

Ray’s comments on Thursday marked his first media interview since taking control of FTX on Nov. 11.

He told the Journal that when he acquired the company, he found that there was no centralized registry logging where the company kept its funds and his team struggled to find out where FTX kept customers’ cash and cryptocurrency.

Ray said he initially received help from FTX co-founder Gary Wang and Caroline Ellison, the former CEO of Alameda Research, both of whom have since pleaded guilty in connection with the scandal.

FTX co-founder Gary Wang Caroline Ellison, former CEO of Alameda Research

Ray said he received initial help from FTX co-founder Gary Wang and Caroline Ellison, former CEO of Alameda Research, both of whom have since pleaded guilty

Sam Bankman Fried is seen after his hearing in federal court earlier this month

Sam Bankman Fried is seen after his hearing in federal court earlier this month

But Ray dismissed the many public criticisms leveled at him by Bankman-Fried, who said he regretted his resignation and complained that Ray had refused to return his calls and emails.

“We don’t need to talk to him,” Ray said of Bankman-Fried. “He didn’t tell us anything I don’t already know.”

Meanwhile, the fallout from FTX’s collapse this week continued to unfold in the crypto sector.

Cryptocurrency lender Genesis Global Capital plans to file for bankruptcy later this week, Bloomberg News reported Wednesday, citing people with knowledge of the situation.

A bankruptcy filing has been expected for weeks after the company froze customer redemptions on Nov. 16, days after FTX imploded.

Genesis, its parent company Digital Currency Group and creditors have exchanged several proposals but have so far come to no agreement, the Bloomberg report said.

Genesis is also embroiled in a dispute with Gemini, founded by identical crypto pioneer twins Cameron and Tyler Winklevoss, who claim they are owed $900 million under a partnership agreement.