Robert Steinadler, 2 months ago
FTX caused not only the biggest drama for crypto in 2022 but arguably the biggest incident in the history of the whole industry. Its founder and CEO awaits his trial in New York and could face more than 100 years in jail if found guilty. In response to the crisis, the market crashed in November 2022 and it took several months for it to recover. Even after such a devastating blow a big surprise has been reportedly revealed during a court hearing.
Why is FTT skyrocketing and will FTX reopen this year? `
A report from Coindesk suggests that the defunct crypto exchange could reopen in Q2. FTX went bankrupt after customers initiated a bank run. It was at this moment that it became clear that the exchange was missing customer funds.
Allegedly, FTX commingled customer funds with its parent company Alameda Research. Both were controlled by Sam Bankman-Fried who went from cryptos poster child to one of the most disputed characters in the industry.
Billions of dollars were missing and apparently, both companies were running a network of subsidiaries. This made it complicated for bankruptcy lawyers to collect all the remaining funds and get a clear picture of how much there is missing.
According to the report, the attorneys of FTX said during a court meeting that reopening is one of many options that are currently being discussed. There are over $7 billion on the table which is significantly more than in January when only $1.9 billion were secured. However, a restart would most likely require raising capital from a third party.
Another option would include offering creditors to convert their holdings partially into a stake in FTX. This is a similar model that Bitfinex used after suffering a fatal hack in 2016. The platform gave tokenized shares to creditors to maintain its business.
Even though all of these statements are far from being put into action, the market reacted heavily to the breaking news. The FTT price surged by 139% and at the time of writing a correction has set in. It appears that some traders speculate that the exchange token could play an important role if FTX is going to reopen. In this context, it is important to remember that there is currently no evidence that FTX is going to reopen anytime soon or that FTT will play any role in the future.
Featured image: © Dennis Diatel / Shutterstock.com
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