FTX Token Rallies After New Chief Says Crypto Exchange Could Restart

Cryptocurrency exchange FTX announced its bankruptcy recently. (Stefani Reynolds/AFP)

FTT, the native digital token for bankrupt cryptocurrency exchange FTX, rallied as much as 35 percent on Jan. 19 after a report revealed that new CEO John J. Ray III is considering restarting the platform.

According to The Wall Street Journal, Ray has established a team to look at resuscitating FTX.com, the website that maintains non-U.S. clients. Ray and his team would determine if reviving the exchange would recover more value for the firm’s users rather than liquidating assets or selling the platform.

“Everything is on the table. If there is a path forward on that, then we will not only explore that, we’ll do it,” Ray told the Journal.

“There are stakeholders we’re working with who’ve identified what they see is a viable business.”

It’s unclear if there'd be any customer demand, especially after the company discovered “substantial shortfalls” of its clients’ digital assets at both the U.S. and international exchanges compared to what users are owed.

Now that the crypto exchange is going through Chapter 11 bankruptcy proceedings, Ray’s main objective is to uncover any last vestige of value.

Ray has been forthright about the state of the company, explaining in filings that he'd never “seen such a complete failure of corporate controls,” calling it an “unprecedented” occurrence in his four-decade career.

FTX Group CEO John Ray testifies before the House Financial Services Committee on "Investigating the Collapse of FTX, Part I," at the U.S. Capitol in Washington on Dec. 13, 2022. (Olivier Douliery/AFP via Getty Images)

Ray revealed when he took over FTX that he wasn’t provided a location where FTX staff stored clients’ cash and cryptocurrency. He then discovered that there was no centralized system to determine where the firm stored its money. According to Ray, there was no record or proof of transactions for many of Bankman-Fried’s multimillion-dollar deals.

This comes shortly after the FTX CEO confirmed that about $415 million of crypto was stolen by hackers—$323 million from the international exchange and $90 million from the U.S. platform. FTX also informed the bankruptcy judge in Delaware that it had retrieved more than $5 billion in assets, including $3.5 billion in liquid crypto and $1.7 billion in cash.

Bankman-Fried ‘Glad’ About the News

Former CEO Sam Bankman-Fried celebrated the news on Twitter, commenting in a tweet that he’s “glad Mr. Ray is finally paying lip service to turning the exchange back on” after months of resistance.

“I’m still waiting for him to finally admit FTX US is solvent and give customers their money back,” Bankman-Fried wrote in a tweet, sharing a link to his Substack post.

The FTX co-founder has repeatedly claimed that the company is solvent, “as it always as [sic] been.”

Despite investigators noting that the company held only $181 million worth of crypto, Bankman-Fried asserted that they should’ve included the $428 million of cash held by FTX US.

“These claims by S&C [Sullivan & Cromwell] are wrong, and contradicted by data later on in the same document,” he wrote on Substack. “FTX US was and is solvent, likely with hundreds of millions of dollars in excess of customer balances.”

In November 2022, he wrote in a tweet that FTX US faced different solvency challenges than its international alternative. The U.S.-based exchange is “100 percent liquid,” according to Bankman-Fried.

Ray has dismissed Bankman-Fried’s comments, telling the Journal that “we don’t need to be dialoguing with him.”

“He hasn’t told us anything that I don’t already know,” adding that Bankman-Fried’s statements have been misleading.

“That’s unfortunate because people are continuing to be victims right now. They are victims of misinformation,“ he said. ”It’s harmful.”

Still, Bankman-Fried reiterated his stance that FTX is solvent.

“Mr. Ray continues to make false statements based on nonexistent calculations,” he told the Journal. “If Mr. Ray had bothered to think carefully about FTX US, he would likely have realized both that his interpretation is wholly inconsistent with bankruptcy law, and also that even if one were to subtract $250 million from my balance sheet, FTX US would *still* have been solvent. Rather, Mr. Ray sees everything as one big honey pot—one he wants to keep.”

Meanwhile, some market experts aren’t exactly bullish on the idea of relaunching FTX.

“Restarting FTX is like when your margin trading account gets liquidated but you deposit just a little bit more money to ‘give it one last shot,’” former money manager and market commentator Genevieve Roch-Decter said in a Twitter post.

Last month, the U.S. Securities and Exchange Commission officially charged Bankman-Fried with defrauding FTX investors and violations of securities law. He was also charged with eight criminal counts, including conspiracy to commit money laundering and wire fraud.

The 30-year-old defendant pleaded not guilty. If convicted, he could face up to 115 years in prison.

In the end, crypto enthusiasts appear optimistic about the company’s prospects moving forward as FTT touched a two-month high of $2.50 in intraday trading on Jan. 19. The token’s market cap is inching closer to $750 million, which is still down from its all-time high of $9.39 billion in September 2021.