FTX Considers Restarting Crypto Exchange, Lawyers Billing Millions
The legal team for bankrupt cryptocurrency exchange FTX is exploring the possibility of restarting the company, including examining tax issues, cybersecurity implications and user experience testing. The exchange’s collapse left creditors with at least $11.6bn in claims and destabilised the cryptocurrency market. The new CEO, John J. Ray III, has expressed an interest in restarting the international exchange, FTX.com, to “recover value for its creditors and customers”. However, re-establishing trust with customers and the broader cryptocurrency community will require addressing the issues that led to FTX’s collapse, including better risk management and greater transparency. There are two possibilities for the newly appointed team for the future of the fallen exchange: a limited effort to process withdrawals for customers who could not access their funds due to the exchange’s collapse or a broader effort to relaunch the entire business. FTX’s first interim report into control failures at the exchange revealed organisational structure and management practices deficiencies, and a lack of board oversight. It also found a significant lack of records and evidence regarding the location and accessibility of both fiat currency and digital assets, meaning assets could not be determined, leading to legal and financial challenges. The legal team’s fees for February totalled $13.5m, reflecting significant work in recovering billions of dollars in assets and allegedly co-operating with law enforcement to potentially restart the exchange.
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