As FTX mulls a return to operations, its FTT token stash is growing more valuable.
This, as the CEO tasked with steering the collapsed cryptocurrency exchange through its bankruptcy, John J. Ray III, announced yesterday (Jan. 19) that FTX is exploring a return to crypto trading operations, per a report by the Wall Street Journal (WSJ).
“I’m glad Mr. Ray is finally paying lip service to turning the exchange back on after months of squashing such efforts!” former CEO and FTX founder Sam Bankman-Fried tweeted in response to the news, adding that he is still “waiting for [Ray] to finally admit FTX US is solvent and give customers their money back.”
FTX’s self-minted token FTT, which was at the center of the nearly $8 billion run on the exchange’s assets by started by rival exchange Binance’s CEO Changpeng Zhao, jumped nearly 33% on the news of a potential restart.
Considered a so-called “ghost token,” aka a digital asset still trading in circulation but not tethered to any viable business, the FTT token’s rise to a value north of $2 represents a substantial increase from the asset’s all-time low of just $0.82 near the end of 2022.
Despite FTX’s complete implosion, the company’s native token has never dipped to zero, and trading volumes remain surprisingly high — likely driven by traders continuing to make bets on its volatile swings.
Given that FTX still holds around half a billion dollars worth of FTT tokens on its balance sheet, any increase in value represents a comparable cash inflow for creditors. Thursday’s announcement alone netted the FTX estate an estimated $100 million or so.
Bitcoin is also trading up in January and has recovered all its lost value since FTX’s disastrous collapse sent tremors throughout the broader digital asset marketplace.
By restarting FTX’s trading operations, Ray could be thinking he can do the same and make the exchange’s over a million customers as close to whole again as possible. A rising tide lifts all boats, after all.
Per the WSJ coverage, customers have lauded FTX’s technology and suggested that a revival of FTX.com would recover more value than liquidating the firm’s assets. “There are stakeholders we’re working with who’ve identified what they see is a viable business,” Ray has said.
As PYMNTS reported Tuesday (Jan. 17), the FTX Debtors group and the restructuring committee led by Ray have identified $5.5 billion in liquid cash and assets in the FTX estate. This number is up from a previously shared estimate of $5 billion but still represents a “substantial shortfall of digital assets.”
The sheer volume of alternative crypto assets on FTX’s books could sway Ray into re-opening the crypto casino to fulfill his primary responsibility of recovering as much money as possible to repay FTX’s creditors.
In a recent court filing, lawyers for the FTX Debtors revealed that Alameda Research, the sister hedge fund of FTX, holds more than 20 alternative digital assets on its balance sheet in such large quantities as to make them impossible to sell on the open market without substantially affecting their values.
FTX purportedly made legitimate, real money by charging the traders operating on its platform transaction and custody fees. If FTX relaunches, people keep trading and the company again begins accumulating profits, perhaps over enough time those gains may be enough to fill the chasm caused by the failed exchange’s alleged commingling and subsequent loss of assets.
John Ray’s job is to identify and plumb any remaining pockets of value and plumb them. Per the WSJ, former FTX lieutenants Gary Wang and Caroline Ellison are helping the CEO track the company’s enterprise funds. Both of the one-time executives have pleaded guilty to criminal charges and are cooperating with authorities in their broader investigations into FTX.
“Everything is on the table,” Ray said, as quoted by the WSJ. “If there is a path forward on that, then we will not only explore that, we’ll do it.”
Ray has continued to clash with Bankman-Fried, who maintains his own innocence in the face of eight criminal charges ranging from fraud to conspiracy and continues to publicly proclaim that he is best suited to run his former company. Bankman-Fried has said it was a mistake for FTX to file for chapter 11 so suddenly, lashing out at his law firm and frequently criticizing the new CEO’s handling of the company.
“We don’t need to be dialoguing with [Bankman-Fried],” Ray said, per the WSJ. “He hasn’t told us anything that I don’t already know.”
The restructuring agent added that he viewed the former founder’s comments as “unhelpful and self-serving.”