Bankrupt crypto exchange FTX could see a resurgence, with multiple bidders showing interest in a potential restart, according to investment banker Kevin Cofsky of Perella Weinberg Partners.
Speaking during a court hearing, Cofsky revealed the defunct exchange, which had seen daily trades worth tens of billions of dollars at its peak, now has at least three potential buyers.
Decisions on the future of the exchange are expected by mid-December. These plans will then be presented to the Delaware bankruptcy court for approval.
Cofsky’s recent statements played a role in the decision to keep the list of FTX’s nine million customers confidential, understanding its value to potential FTX buyers.
FTX 2.0: Is the exchange preparing for a relaunch?
The FTX collapse last November led to one of the largest fallouts in crypto history. The crisis not only reflected broader market instabilities but also led to serious legal trouble for FTX founder and former CEO, Sam Bankman-Fried, who is currently on trial facing seven fraud charges.
The company’s new CEO, John J. Ray III criticised its previous financial management. Ray has since proposed a plan that might return up to 90% of any recovered assets to the creditors.
He has also shown intent to relaunch the exchange. Since May, the FTX estate reached out to over 75 potential bidders, aiming to gauge the industry’s interest in the exchange’s comeback.
The practical details about the new structure of the exchange, dubbed ‘FTX 2.0‘, are still uncertain. According to a recent filing, the restructuring could take the form of “an acquisition, merger, recapitalization, or other transaction” to relaunch the FTX platforms.
In his court testimony, Cofsky said: “We’ve narrowed the field from a large number to a smaller number in what we’re calling our second round. I am optimistic that we will have either a plan for a reorganized exchange, a partnership agreement or a stalking horse for a sale, on or prior to the December 16 milestone date.”
FTX is currently discussing binding offers with the three bidders, although their identities weren’t disclosed. Options include selling FTX, forming a partnership for a relaunch, or independently rebooting the platform.
Repayment plans for customers
Andrew Dietderich, FTX’s legal counsel, recently updated the court about preliminary settlements between FTX and its main creditor groups. This agreement will pave the way for FTX to draft a detailed repayment plan for its creditors in December.
Administrators have retrieved about $7billion in FTX assets so far, of which $3.4bn is in cryptocurrencies. The final repayment percentages for creditors have not been clarified. These figures are said to largely depend on the funds generated from either selling or relaunching FTX.
Meanwhile, Bankman-Fried is currently on trial for the fraud that led to FTX’s downfall. The prosecution is expected to finish this case, when SBF’s lawyers will begin presenting their case.
The trial started on 3 October and is expected to last six weeks. This means a final decision will be made before the end of November. SBF could face a maximum prison time of over 100 years.