The new chief executive of FTX, who took control of the bankrupt crypto exchange from disgraced founder Sam Bankman-Fried, has raised the possibility of reviving the business.
John J. Ray III, a respected attorney who oversaw the liquidation of Enron and took over FTX in November, raised the possibility in surprising remarks to the Wall Street Journal on Thursday.
Ray’s primary duty in overseeing the bankruptcy is returning the maximum value to creditors who were stiffed in FTX’s collapse, and he now must assess whether reopening the exchange would settle more debts than liquidating the company.
‘Everything is on the table,’ said Ray. ‘If there is a path forward on [reopening the FTX exchange], then we will not only explore that, we’ll do it.’
The implosion of FTX last fall left clients and investors out billions, and Bankman-Fried facing criminal charges alleging that he misappropriated funds to prop up his hedge fund and make lavish real estate purchases and political donations.
FTX CEO John J. Ray III, who took control of the bankrupt crypto exchange from disgraced founder Sam Bankman-Fried, has raised the possibility of reviving the business
The implosion of FTX last fall left clients and investors out billions, and Bankman-Fried (center) facing criminal charges alleging that he misappropriated funds
In the aftermath, Ray has been tasked with guiding the company through bankruptcy and identifying and securing assets that can be used to compensate creditors, whose claims against the company total in the billions.
Ray told the Journal he has set up a task force to explore restarting FTX.com, the company’s main international exchange.
The task force is examining whether reviving the exchange would recover more value for the company’s customers than his team could get from 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 customers to prop up his crypto-focused hedge fund, Alameda Research. He has pleaded not guilty to fraud charges.
The future of customer funds, and how much might be returned to clients who lost their deposits, remains unclear.
‘Crime is very expensive. It does a lot of damage to people,’ Ray told the Journal. ‘And one of the damages is that people like me have to come in and fix it.’
Court filings show that Ray is making $1,300 an hour for his work overseeing the FTX bankruptcy. That money, and other fees involved in team overseeing the restructuring, comes out of the pot that would otherwise go to pay creditors.
The website of FTX.com currently displays this message, but Ray has raised the possibility that the exchange could reopen
Earlier this week, FTX said in a report to creditors that hackers stole about $415 million in crypto from its international and US exchanges in the chaos since its bankruptcy in November.
Ray’s team previously said in court filings that they have located $5 billion in liquid assets and a $4.6 billion investment portfolio, which can eventually go toward paying creditors.
However, its 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 its top 50 creditors more than $3 billion, but the number of smaller creditors could total in the millions, and their total claims are unclear.
Ray’s remarks on Thursday marked his first media interview since he assumed control of FTX on November 11.
He told the Journal that when he took over the company, he found there was no centralized register logging where the company stored its funds, and his team struggled to identify where FTX kept customers’ cash and crypto.
Ray said that he initially he got help from FTX co-founder Gary Wang and former Alameda Research CEO Caroline Ellison, who have both since pleaded guilty to criminal charges in connection with the scandal.
Ray said that he initially he got help from FTX co-founder Gary Wang and former Alameda Research CEO Caroline Ellison, who have both since pleaded guilty to criminal charges
Sam Bankman Fried is seen after his federal court hearing earlier this month
But Ray was dismissive of the many public criticisms leveled against him by Bankman-Fried, who said he regretted stepping down and complained that Ray has refused to respond to his calls and emails.
‘We don’t need to be dialoguing with him,’ Ray said of Bankman-Fried. ‘He hasn’t told us anything that I don’t already know.’
Meanwhile, fallout from the collapse of FTX continued to spread through the crypto sector this week.
Cryptocurrency lender Genesis Global Capital is planning to file for bankruptcy as soon as this week, Bloomberg News reported on Wednesday, citing people with knowledge of the situation.
A bankruptcy filing has been expected for weeks, after the company froze customer redemptions on November 16, days after the implosion of FTX.
Genesis, its parent Digital Currency Group and creditors have exchanged several proposals, but have so far failed to come to an agreement, the Bloomberg report said.
Genesis is also locked in a dispute with Gemini, founded by the identical twin crypto pioneers Cameron and Tyler Winklevoss, who claim they are owed $900 million over a partnership deal.