The crypto market suffered a highly severe bear market in 2022. In the wake of this downtrend, many operators in the sector collapsed. Among them is the FTX exchange. It has been 7 months since the crypto exchange imploded. However, there are talks of re-launching the centralized exchange already circulating.
Initially, FTX 2.0 sounded like a joke – until it became serious. A restart of the collapsed FTX exchange might be in the pipeline. This development has been confirmed by an official document showing the new FTX CEO John Ray III billing for the work involved in multiple FTX 2.0 items.
FTX CEO John Ray III confirms FTX 2.0 plans. pic.twitter.com/FeCXOvdrt0
— FTX 2.0 Coalition (@AFTXcreditor) May 22, 2023
Who is in favor of an FTX 2.0 launch and why would they support the return of a failed cryptocurrency exchange? Is it a viable idea?
What Is FTX 2.0 And How Would It Operate?
The new CEO of FTX, John Ray III, has been in charge of cleaning up the mistakes that happened during the Sam Bankman-Fried era. He has lots of experience since he also helped recover creditors’ assets after Enron collapsed.
This is FTX's new CEO John Ray III.
There is no contradiction with new management suing old management. pic.twitter.com/8OtAR4QInY
— FTX 2.0 Coalition (@AFTXcreditor) May 19, 2023
He first mentioned the re-launch of the FTX exchange several months ago. With the deficit in the balance sheet having dropped to ‘just’ $6.8 billion, the re-opening was being explored as a substitute method of making users whole speedily. Since liquidation processes can go on for many years, leveraging the expertise that is left to operate the exchange might be a viable alternative.
What began as a thought test changed considerably in recent months and became something else. In that context, the “FTX 2.0 Coalition” expertly formed around the plan.
We are proud to announce the formation of an FTX 2.0 Coalition, started by @loomdart and @AFTXcreditor.
Growing the idea and ethos of FTX 2.0, we advocate for a restart of FTX to make users more than whole and build a better, safer exchange for everyone.https://t.co/4Tnl6hYrlB pic.twitter.com/l8sZnqKqdj
— FTX 2.0 Coalition (@AFTXcreditor) May 14, 2023
One of the notable opinion leaders in the crypto sector, Loomdart, is among the supporting voices behind the FTX 2.0 plan.
Happy to announce I'll be working with AFTXcreditor on helping grow the idea and ethos of FTX 2.0, advocating and educating in the pursuit of a restart that can help make users whole and build something really really cool.
Follow @aftxcreditor and join us at… https://t.co/hcaoAJqLZD
— loomdart – (FTX 2.0 Advocate) (@loomdart) May 17, 2023
He mentioned that launching FTX 2.0 would be a great way to get investors’ money back. It would also be a great way of getting back at Sam Bankman-Fried for recovering the customer funds back without involving him in any way.
Ppl keep asking me why I'm doing all the ftx 2.0 stuff
1) I'm a huge creditor and I want my fucking money back and I think theres enough people like me to really give this thing a huge chance
2) the history books will forever record the fact wassies saved a multi bn $ blow up
— loomdart – (FTX 2.0 Advocate) (@loomdart) May 22, 2023
How would FTX 2.0 work?
It has been proven that nothing was wrong with the FTX exchange. It was profitable in its operations.
Why restart FTX?
1. FTX was profitable [1,2]
John Ray 3.0 threw all the prior accounting in the trash and rebuilt the numbers from scratch.
Results confirm: The exchange was a money printer.
The problem was that a bankrupt hedge fund robbed it to hide its bankruptcy. pic.twitter.com/3FBoWjNaVJ
— FTX 2.0 Coalition (@AFTXcreditor) March 20, 2023
The issue was FTX’s leadership, management, and its habit to take customer money and use it for adjacent Alameda Research fund to gamble on the markets. Furthermore, as the ‘coalition’ insists, Binance’s de-facto market share monopoly means another crypto exchange can easily innovate and grab some of that market share.
Related:Top 10 Crypto Companies That Have Failed And Taken People’s Money
With Bitfinex unable to make that challenge, there is a possibility of a collapsed exchange coming in and making users whole again.
4. Token is free money
Bankruptcy estates that offer a Recovery Token will benefit from market inefficiency. DOGE and SHIB are worth nearly as much as COIN: ~$16 billion.
The ability to issue a Recovery Token for free is powerful and can make creditors whole.
— FTX 2.0 Coalition (@AFTXcreditor) March 20, 2023
Currently, it appears like there are great reasons to support the FTX 2.0 launch. But, is the crypto space also confident about the turn of events?
Reboot Plan Unveiled in Court Filing
Based on court filings reviewed on May 22, John Ray has been working relentlessly on a reboot plan for the collapsed exchange in its Chapter 11 bankruptcy proceedings.
The court filing revealed a compensation report that highlighted Ray’s efforts to safeguard the debtors’ interests. While this report covered different activities implemented by Ray, the mention of a potential FTX reboot created a buzz in the crypto sector.
Reports of the exchange’s rebirth first came up in January when news emerged that the FTX exchange had identified $5.5 billion in liquid assets. The new CEO is actively partnering with creditors on a plan to re-launch the exchange. Other reports in April showed that the exchange had recovered an impressive $7.3 billion in assets, aiming to re-introduce the platform to the market by the second quarter of 2024.
The latest court filing offers more evidence that a relaunch plan is on the table. So far, Ray has already conducted several meetings with debtors and creditors. During these meetings, the discussions covered various topics including relaunch plans, exchange structuring, and the needed materials for the relaunch, cautiously called FTX 2.0.
It seems that the exchange will enter a bidding process forming part of its revival approach.
Can FTX 2.0 Work?
Some operators in the crypto sector support the idea of launching debt claims on the new FTX 2.0 exchange to enable creditors to sort out these claims themselves.
https://twitter.com/DegenSpartan/status/1660809999466250242
Nevertheless, not everyone supports this idea. Flood believes that a restructuring would return customer money quicker.
Question for y’all
— Flood (@ThinkingUSD) May 22, 2023
But, with potential bankruptcy proceedings taking between five and ten years, as happened in the Madoff case, a successful re-launch of the FTX exchange can help fill the deficit faster.
Related:Crypto Industry Problems Intensify As More Banks Shut Down
Would the launch be successful?
It is undeniable that the reputation of the FTX exchange is severely tainted. The extent to which a re-launch under credible management would assist in restoring the company’s image is still unclear.
Also, spot exchange volumes have been dropping in recent months, which means it might be considerably more challenging for the FTX exchange to make lots of money as it used to do before its collapse.
Expectedly, the US government may want to get paid out first. Notably, the IRS filed a claim of $44 billion in missing tax revenue. It is not yet known how that issue is to be resolved.
It is yet to be known whether FTX 2.0 will see the light of day. Even if it manages to launch, it might be a long road to recovery for the creditors.
