FTX, the crypto exchange that filed for bankruptcy in 2023, is working on a plan to restart its services for customers outside the US. The plan involves a proposal for some claimants to pool their assets to form a new offshore exchange company. The news boosted the price of FTX’s native token, FTT, by 10%.
What is FTX?
FTX was a crypto exchange that offered derivatives, futures, options, and spot trading. It was founded by Sam Bankman-Fried, a former Wall Street trader and a prominent figure in the crypto industry. FTX was known for its innovative products, such as leveraged tokens, prediction markets, and tokenized stocks.
However, FTX faced legal troubles in 2023, when it was sued by Genesis Global Trading, a crypto lending firm, for allegedly defaulting on a $850 million loan. FTX also faced regulatory scrutiny from the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) for offering unregistered securities and violating anti-money laundering rules.
In April 2023, FTX filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Southern District of New York. It claimed to have more than $1 billion in liabilities and less than $500 million in assets. It also suspended its services and froze its customers’ funds.
What is the restart plan?
According to a report by The Wall Street Journal, FTX is in the early stages of restarting its services for customers outside the US. The plan was filed by the bankruptcy administrators and requires approval from the court and the creditors.
The plan shows that the claimants have been divided into different groups, based on their location and type of claim. One of the groups is called “dotcom customers”, which refers to the international customers who used the FTX.com domain.
The dotcom customers are a third-party group that has to agree to the idea of being rebooted. They will have to pool their assets, including cash, crypto, and FTT tokens, to create an offshore exchange company. The offshore company will then operate a new version of FTX.com for international customers.
The plan also states that the dotcom customers will receive equity securities and tokens in the offshore company, as well as a share of any future profits or distributions. The plan also promises to resolve any disputes or claims between FTX and Genesis Global Trading.
How did the market react?
The market reacted positively to the news of FTX’s potential relaunch. The price of FTT, the native token of FTX, surged by 10% in the past 24 hours. FTT is currently trading at $1.47, up from $1.34 yesterday.
FTT is an ERC-20 token that runs on the Ethereum blockchain. It has a total supply of 350 million tokens and a circulating supply of 94 million tokens. FTT holders can enjoy various benefits on FTX, such as lower trading fees, staking rewards, governance rights, etc.
FTT Price Chart. Source: CoinMarketCap
The news also boosted the sentiment of the crypto market in general. The total market capitalization of all cryptocurrencies increased by 2% in the past 24 hours, reaching $1.2 trillion. Bitcoin, the largest cryptocurrency by market cap, rose by 1% to $32,000. Ethereum, the second-largest cryptocurrency by market cap, rose by 3% to $2,000.
What are the challenges and risks?
While the news of FTX’s restart plan is encouraging for its customers and investors, it also comes with many challenges and risks. The plan is still subject to approval from the court and the creditors, which may take time and face opposition. The plan also depends on the cooperation and consent of the dotcom customers, who may have different interests and preferences.
Moreover, the plan does not address the regulatory issues that FTX faced in the US and other jurisdictions. The offshore company may still face legal actions or sanctions from regulators for offering unregistered securities or violating anti-money laundering rules. The offshore company may also face operational difficulties or security breaches that could affect its services or customers’ funds.
Furthermore, the plan does not guarantee that FTX will be able to restore its reputation and competitiveness in the crypto industry. FTX may have lost its trust and loyalty from its customers and partners due to its bankruptcy and suspension. FTX may also face fierce competition from other crypto exchanges that offer similar or better products and services.
FTX is a crypto exchange that filed for bankruptcy in 2023 due to legal troubles and regulatory scrutiny. It is working on a plan to restart its services for international customers by creating an offshore exchange company with the assets of some claimants. The news boosted the price of FTX’s native token, FTT, by 10%.
The plan is still in the early stages and requires approval from the court and the creditors. The plan also faces many challenges and risks, such as regulatory uncertainty, operational difficulty, and market competition. The plan does not guarantee that FTX will be able to revive its business and regain its position in the crypto industry.