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FTX weighs controversial reboot plans amid legal issues—what happens next?

FTX

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TL;DR

  • FTX is facing a pivotal decision as it considers three different proposals for its reboot amid ongoing legal scrutiny surrounding its former CEO.
  • Options for the future of FTX include an outright sale, partnering with an external entity, or a solo relaunch, each with its own set of complexities and risks.
  • With a reorganization plan due in December and $7 billion already recovered to repay creditors, the exchange’s next move will have significant implications for its future and potentially the wider industry.

Bankrupt cryptocurrency exchange FTX is entangled in a dilemma that can shape not only its future but also set a precedent for the crypto industry. However, according to a Bloomberg report, the company has received three distinct proposals to reboot the exchange. The intentions are clear: resurrect FTX, but the route to take remains controversial. Kevin Cofksy of Perella Weinberg Partners, an investment banker associated with FTX, disclosed that a decision will be made before year-end.

A shady past still haunts

The enterprise faces skepticism and criticism, most prominently due to its former CEO, Sam Bankman-Fried, who is currently undergoing trial on seven federal fraud counts. Entering the fourth week of the trial, the scrutiny over Bankman-Fried casts a shadow over the company’s attempts at resurgence. 

Moreover, despite this precarious position, the exchange had, surprisingly, announced a proposed settlement to resolve “customer property disputes,” promising to return around 90% of the funds to their rightful owners. Significantly, the assets are to be divided into three distinct categories: FTX.US customers, a general pool, and assets for FTX.com. But there are doubts on whether this is just a strategy to divert attention or a genuine attempt at reparation.

Options on the table

FTX has several potential pathways for its reboot. It can either be sold outright, rope in an external partner to facilitate the reboot or go it alone by relaunching without its former CEO. Each option carries its own complications and drawbacks. 

Selling the company might signify an ignominious end, but it may be the safest way to ensure assets are returned to stakeholders. Bringing in an outside partner could add a veneer of credibility, yet it does not entirely erase the scars of past misdeeds. Lastly, a solo relaunch could be perceived as an audacious move, but it lacks the stamp of external validation, rendering it vulnerable to skepticism.

Consequently, the stakes are high, and the decisions to be made are complex. The looming deadline for the reorganization plan set to be filed in December intensifies the pressure. Already greenlit to sell about $100 million worth of digital assets per week, the administrators have recovered approximately $7 billion to repay creditors—with $3.4 billion in cryptocurrency. 

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space. He also studies the ramifications of Web3 and blockchain development to have a stake in the future economy.

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