FTX CEO John Jay Ray III said Thursday that he is open to reviving the bankrupt exchange if the move provides a path to return money to the crypto trading venue’s customers and other creditors.
“Everything is on the table,” Ray told the Wall Street Journal in an interview published Thursday. “There are stakeholders we’re working with who have identified what they see as a viable business.”
Following this interview, crypto exchange token FTT (FTT-USD), earned up to 35%. FTT has lost 90% of its value since the end of October 2022. At its peak in September 2021, FTT was trading north of $70 per token.
The collapsed crypto exchange said Tuesday it has identified $5.5 billion in liquid assets, but also said based on current estimates, both the company’s international exchange and its U.S.-based exchange still face a “significant shortfall” from what countries of trading are owed to customers.
A court document with the restructuring team’s latest findings shows that the $5.5 billion includes $1.7 billion in cash, $3.5 billion in crypto assets and $0.3 billion in securities. Notably, $529 million of the company’s crypto assets are held in its FTT token.
Last Wednesday, an attorney with white-shoe law firm Sullivan & Cromwell, which represents FTX, told a federal bankruptcy court that the restructuring team was also working to sell $4.6 billion in illiquid non-strategic investments.
While the exact shortfall between FTX’s assets and liabilities owed to creditors has yet to be revealed in the bankruptcy proceedings, the exchange’s founder and former CEO Sam Bankman-Fried has claimed in two posts on Substack that FTX US “was and it is paying”.
Bankman-Fried, who has been placed at his parents’ home in Palo Alto on bail, also accused Sullivan & Cromwell of being “extremely deceptive.”
Before FTX filed for bankruptcy, the company paid Sullivan & Cromwell $20.5 million for services related to the firm serving as legal counsel on various business transactions. “When I visited NYC, I sometimes worked out of the S&C office,” Bankman-Fried said last week.
The US trustee has previously expressed concern about the issue of a potential conflict of interest in his argument to the judge for the appointment of an independent examiner.
According to court records, several U.S. senators have also raised concerns that the law firm is unsuited to represent FTX in bankruptcy. One FTX creditor agreed with the conflict, comparing the situation to “a blatant attempt by a fox to guard a chicken”.
Ray also said that he was initially not given an indication of how FTX held its cash and cryptos, but was helped by FTX co-founder Gary Wang and the former CEO of its related trading firm Alameda Research, Caroline Ellison.
A Justice Department complaint unsealed Dec. 21 indicated that both Wang and Ellison pleaded guilty to criminal charges related to how FTX allowed Alameda Research to spend billions in funds belonging to clients.
“We don’t need to dialogue with him,” Ray also said of his communication with Bankman-Fried, whom he has kept at a distance. “He hasn’t told us anything I don’t already know.”
Tomorrow, Friday, January 20, in a federal bankruptcy court in Delaware, Ray will testify on the subject of retaining Sullivan & Cromwell and other partners as counsel for the debtors. In addition, the court will consider whether the names of some of FTX’s creditors should remain under seal.
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