In a surprising turn of events, the beleaguered cryptocurrency exchange FTX has officially abandoned its ambitious plans to relaunch as FTX.com. Dismissing earlier speculations, the company has opted for liquidation in a bold move to completely reimburse customer funds that were locked when the exchange collapsed in 2022.
FTX’s initial announcement of rebranding and relaunching as FTX.com was accompanied by a draft creditor-repayment plan, emphasizing a commitment to settling customer claims in cash. Recent reports reveal that the exchange, grappling with the challenge of settling these claims, resorted to unloading its crypto holdings as a strategy to generate much-needed funds.
During a court hearing, FTX attorney Andy Dietderich shed light on the company’s ongoing efforts to repay locked customer funds, disclosing that over $7 billion in assets had been recovered. The company remains optimistic about fully repaying its customers, and government regulators, holding approximately $9 billion in claims, have agreed to patiently wait until customers are satisfied.
Despite these positive developments, FTX has now shelved its plans to re-establish the exchange. The primary stumbling block appears to be a lack of sufficient capital to invest in the relaunch. Dietderich explained that negotiations with potential bidders and investors were underway, but they hesitated to commit the necessary funds to kickstart the platform.
He went on to highlight shortcomings in the technology and administration left behind by FTX’s founder, Sam Bankman-Fried, characterizing the situation as an “irresponsible sham” that posed high costs and risks.
“FTX was an irresponsible sham created by a convicted felon. The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in a dumpster were simply too high,” remarked Dietderich.
The announcement has had a significant impact on FTX’s native FTT token, which saw a sharp decline of approximately 35%, trading at $1.72. Spot On Chain, a notable analytics platform, pointed out internal exchange transactions in the wake of the news, suggesting that influential market players, colloquially known as “whales,” are strategically responding to the revelation that the defunct crypto exchange won’t be resurrected.
As FTX pivots towards liquidation, the cryptocurrency industry is left to assess the implications of this unexpected development, reflecting the challenges faced by even prominent entities in the ever-evolving and volatile crypto landscape.