cryptonews.com
FTX is considering rebooting its platform amid reports that the bankruptcy team has managed to stabilize the situation and recover a huge portion of the missing assets.
The now-defunct crypto exchange has recovered over $7.3 billion in cash and liquid crypto assets, an $800 million increase from the last report, Andy Dietderich, an attorney for the company, said on Wednesday at a US bankruptcy court hearing in Delaware.
Dietderich added the company is starting to think about pushing forward with an effort to restart the bankrupt crypto exchange.
"The situation has stabilized, and the dumpster fire is out," he reportedly said.
The attorney also noted that FTX has benefited from the recent rally in crypto prices. Based on crypto prices from November 2022, the recent recovery would be valued at $6.2 billion, compared to today's $7.3 billion.
It is not yet clear whether FTX would use the recovered funds to reboot its platform or repay creditors, Dietderich said. Restarting the exchange might require outside funding or a sale of the exchange's assets.
Dietderich added that the company is also working on a preliminary Chapter 11 plan that would offer the company a path out of bankruptcy.
FTX aims to file that plan by July but noted that it would first need to work out many details 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, the monthly fee statements from law firm Sullivan & Cromwell, which handles the bankruptcy of FTX, shows that FTX lawyers have been exploring tax issues surrounding a potential reboot of the exchange as well as the cybersecurity implications and testing user experience, Bloomberg reported.
Back in January, FTX's new CEO John Ray said that he is open to the idea of relaunching the platform. He said at the time:
“Everything is on the table. If there is a path forward on that, then we will not only explore that, we’ll do it."
FTX Lacked Experts in Key Areas
Over the weekend, FTX debtors released a report that claimed the exchange lacked fundamental accounting controls as well as experts in key areas like cybersecurity and cryptography.
Despite controlling tens of billions of dollars of assets across its various companies and operating in 250 jurisdictions, FTX Global “lacked fundamental financial and accounting controls,” the report said.
The report added that FTX Global had poor or near non-existent digital asset management, information security, and cybersecurity controls, which exposed crypto assets under its control to a grave risk of loss, misuse, and compromise.
Furthermore, there was an utter lack of controls related to the management of private keys and seed phrases, with the platform failing to “implement basic, widely accepted security controls to protect crypto assets,” the report said.
“In this report, we provide details on our findings that FTX Group failed to implement appropriate controls in areas that were critical for safeguarding cash and crypto assets,” Ray said in the report.