FTX is considering rebooting its platform amid reports that a bankruptcy panel has managed to stabilize the situation and recover a large chunk of its missing assets.
Andy Dietderich, the company’s lawyer, said Wednesday at a hearing in US bankruptcy court in Delaware that the now-defunct crypto exchange has returned more than $7.3 billion in cash and liquid crypto assets, up $800 million from its last report.
Dietderich added that the company is beginning to think about moving forward with efforts to restart the bankrupt cryptocurrency exchange.
“The situation has stabilized, the garbage container fire has been extinguished,” he said.
The lawyer also noted that FTX benefited from the recent rise in cryptocurrency prices.
Based on cryptocurrency prices since November 2022, the recent recovery would be worth $6.2 billion compared to today’s $7.3 billion.
It’s unclear whether FTX will use the returned funds to reboot its platform or pay off creditors, Dietderich said. Relaunching the exchange may require external financing or the sale of the exchange’s assets.
Dietderich added that the company is also working on a preliminary Chapter 11 plan, which would offer the company an exit from bankruptcy.
FTX aims to submit the plan by July, but noted that many details will need to be worked out first as creditors fight for their share of the company’s assets. The Exchange does not expect any Chapter 11 plan to be approved before the second quarter of 2024.
Separately, monthly fee reports from the law firm Sullivan & Cromwell, which is handling FTX’s bankruptcy, show that FTX’s lawyers were exploring tax issues related to a potential relaunch of the exchange, as well as implications for cybersecurity and user experience testing, Bloomberg reported .
Back in January, the new CEO of FTX, John Ray, said that he was open to the idea of relaunching the platform. Then he said:
“Everything is on the table. If there’s a way forward, we’re not only going to explore it, we’re going to do it.”
FTX lacked experts in key areas
Debtors to FTX released a report over the weekend that claimed the exchange lacked fundamental accounting controls, as well as expertise in key areas such as cybersecurity and cryptography.
Despite controlling tens of billions of dollars in assets and operating in 250 jurisdictions, FTX Global “lacks fundamental financial and accounting controls,” the report said.
The report added that FTX Global had poor or almost non-existent digital asset management, information security and cyber security, exposing crypto assets under its control to a serious risk of loss, misuse and compromise.
In addition, there was an absolute lack of controls related to the management of private keys and seed phrases, and the platform failed to “implement basic, generally accepted security controls to protect crypto-assets,” the report said.
“In this report, we provide details of our findings that FTX Group failed to implement adequate controls in areas that were critical to the protection of cash and crypto-assets,” Ray said in the report.
