New Chief of Failed FTX Exchange, John Ray, Considering A Re-launch

A recent report revealed that the current FTX CEO, who is leading the exchange’s bankruptcy proceedings, is planning to reopen the platform. The CEO, John Ray, is considering options to restart the once-mighty crypto trading platform and to repay its debts.

The Wall Street Journal reported that Ray delegated a task force to examine the options available to re-launch FTX’s international arm. They are also looking for ways to raise funds to compensate customers.

John Ray discovered many assets and companies under FTX’s name and might sell the assets to raise funds. But he believes there could be more value in reopening these companies instead of selling them. However, he is yet to give detailed information about the re-launch consideration since bankruptcy proceedings prioritize customers and might take years to complete. It is possible that customers will never receive complete compensation, and failure is probable.

John Ray told reporters they plan to explore every possible option and would not hesitate to jump on any clear path that shows forte. This development comes after SBF tweeted that FTX US is solvent and has enough funds to pay all customers.

SBF Pleads Not Guilty of Wire Fraud Charges

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Meanwhile, US prosecutors charged SBF with wire fraud conspiracy and money laundering, but he denied involvement in the alleged crimes. SBF pleaded not guilty to wire fraud crimes charges and denied his involvement in the billion-dollar fraud scheme.

After SBF’s apprehension by the Bahamas Police, he remained in custody while awaiting extradition by US authorities. Following his extradition, the authorities left him under house arrest after granting him bail with $250 million collateral.

The founder of failed exchange has been active since his arrest, making public apologies and stating agenda for repaying customers. SBF said he would do everything to compensate his customers, clean up the mess and focus on transparency. But so far, he has failed to live up to this expectation.

John Ray, who has taken over the affairs of FTX, including the bankruptcy proceedings, said a dialog with SBF is unnecessary. According to Ray, SBF hasn’t revealed anything new that he doesn’t already know. To Ray’s comment, SBF responded, saying it is an unreasonably shocking thing coming from someone pretending to care about customers.

FTX is battling a multi-billion dollar liquidity crunch which allegedly emanated from funds mismanagement, lack of transparency, and accountability. The former CEO, Sam Bankman-Fried, allegedly lent customers’ funds to his firm Alameda Research without their consent. But he couldn’t give an account of the said funds, claiming that he was unaware of the disparities in FTX’s balance sheet.

However, former CEO of Alameda Research, Caroline Ellison, and FTX CTO, Gary Wang, are cooperating with US authorities. The two pleaded guilty to several charges, including fraud.

Status of the Robinhood Shares

Amid the FTX bankruptcy proceedings, an issue of $450 million worth of stock in Robinhood Markets sprout up. The Robinhood stock is about 56 million shares owned by Emergent Fidelity Technologies Ltd. Emergent Fidelity is a corporate entity organised in Antigua and Barbuda, which is 90%-controlled by Sam Bankman-Fried, according to FTX’s December 22 filing.

The filing revealed that FTX requested the US bankruptcy court’s intervention over the ownership of the stock. Three parties, BlockFi, Yonathan Ben Shimon, an FTX creditor, and SBF himself, fought to get control of the shares.

SBF claimed the shares would enable him to pay his legal bills. But BlockFi alleged that SBF pledged the shares as collateral for its loan early last year. Jonathan Ben Shimon is an FTX creditor appointed to sell the stock under the court’s supervision.

The FTX Bankruptcy estate ordered ED&F Man Capital Markets, the brokerage firm holding the shares, to freeze the stock at the beginning of the Chapter 11 case on November 11. FTX argued that Emergent only owns the Robinhood stake nominally, but it belongs to FTX. The bankrupt crypto exchange determined in court that Emergent is a special-purpose holding company that owns no other business.

The filing argued the court to keep the shares frozen until FTX figures out how to repay its creditors. FXT further argued that the fight between multiple parties over the Robinhood shares emphasizes why they should stay frozen until the court resolves the issue amicably.

US DOJ Seizes FTX Robinhood Shares, FTX Reports Over $415 Million Hack

Meanwhile, on Wednesday, January 4, the DOJ said it is in the process of seizing several assets linked to FTX

On January 6, the US Department of Justice (DOJ) filed a seizure notice of the Robinhood shares at the bankruptcy court. In the filing, the DOJ stated that the seized shares are properties involved in violations of money laundering and wire fraud crimes.

Bankman-Fried opposed the seizure of the assets, saying he needed them to pay his legal fees. He also argued that the Robinhood shares have nothing to do with FTX or Alameda Research.

While a recent report claims FTX recovered over $5 billion worth of liquid assets to settle customers, about $2 million in cryptocurrency got stolen from Alameda Research. FTX also reported over $415 million stolen in a hack attack. These hacks could affect customers’ trust in getting back their funds.

However, considering how the DOJ operates in matters like this, the authorities might launch a full investigation soon.