A relaunch is one option under consideration as Ray works to return money to FTX’s customers and creditors, he said in an interview with the Wall Street Journal. A task force has been set up to explore restarting FTX.com, he said. Representatives for FTX declined to comment to Bloomberg News on the article or the surge in FTT.
Besides being reopened briefly to allow US investors to repatriate their funds, FTX would likely face a backlash if there was an attempt to relaunch, according to Campbell Harvey, a finance professor at Duke University.
“The brand is toxic," Harvey said. “It is a classic situation where you fooled me once, shame on FTX but if you fool me twice, it’s all on me."
FTX is currently in Chapter 11 bankruptcy, a legal process that gives companies protection from creditors while hashing out a restructuring plan. Companies in Chapter 11 typically explore any and all turnaround plans that would maximize recoveries for creditors.
FTT was at the crux of the collapse of FTX. Like many so-called native tokens, the cryptocurrency was used in part as an incentive to draw transactions to the exchange by providing discounts to its holders. The use of FTT didn’t appear to be a problem until it was revealed that FTT not only was one of the main assets that made up FTX’s balance sheet, but also the token was used as collateral by Alameda Research accessing capital through both centralized and decentralized lenders.
FTT rose by more than 40% to trade as high as $2.60 on Thursday, according to pricing data compiled by Bloomberg. That’s still down more than 90% from its record high of more than $80, according to pricing data from CoinGecko.
“I encourage Mr. Ray to turn back on the exchanges and return customer assets as soon as possible. FTX US is solvent," former FTX CEO Sam Bankman-Fried said through a spokesman on Thursday.
Bankman-Fried has been charged with eight criminal counts, including conspiracy and wire fraud, for allegedly misusing billions of dollars in customers’ funds before November’s spectacular collapse of his cryptocurrency empire. He has pleaded not guilty.
