Several cryptocurrency commentators have expressed skepticism about FTX CEO John Ray’s proposal to reopen the cryptocurrency exchange to investors, citing trust issues and “second class” treatment of clients as reasons why users “don’t feel safe going back” to using platform.
Former FTX CEO Sam Bankman-Fried posted on Twitter on Jan. 20 commending John Ray for looking into the FTX revival, stating that it was the best option for clients of the exchange.
I’m glad Ray finally got the word out about re-exchanging after months of crushing such efforts!
I’m still waiting for him to finally admit that FTX US is able to pay off clients and give them their money back…
– SBF (SBF_FTX) January 19, 2023
I’m glad that mr. Ray is finally getting the hang of reviving the exchange again after months of crushing such efforts!
I am still waiting for him to finally admit that FTX US is able to pay its debts and return clients money back to clients.
– SBF (SBF_FTX)
The comment surfaced after John Ray told the Wall Street Journal on Jan. 19 that he was considering reactivating the cryptocurrency exchange to fully compensate users.
Ray noted that although the company’s former top executives have been accused of criminal misconduct, stakeholders have shown interest in the possibilities of reopening the platform – regarding the exchange as a “viable business”.
In comments to Cointelegraph, Binance Australia CEO Leigh Travers believes it will be difficult for FTX to obtain a license again, especially as the industry will face increased scrutiny and oversight from regulators.
Travers also noted that since the exchange closed, FTX users have moved to “other platforms like Binance.” He wondered if those users would “feel safe to return”.
He touched on the issue of governance and management controls at FTX. The bankruptcy filing revealed that FTX offered some clients “preferential treatment,” including the implementation of “secret programming codes” used on behalf of exchange executives. Travers noted:
“How will users feel comfortable returning to a platform that has treated some customers as second-rate?”
Digital asset lawyer Liam Hennessy, partner at Australian law firm Gadens, believes it will be “very difficult” for FTX — given its reputational damage and lack of trust — to convince clients or investors to “do business with it again.” “
Hennessy was also skeptical about the possibility of FTX being granted a license again, saying that this is a “big question mark” that depends entirely on the jurisdictions in which it intends to operate.
The lawyer believes that in some offshore jurisdictions it would be easier for the exchange to obtain the license, but it would be useless if its users had no interest in returning.
“Overcoming the hurdles that major jurisdictions such as the US, UK and Australia will create will be a huge challenge.”
Meanwhile, Aaron Lane, senior law professor at the Blockchain Innovation Hub at RMIT University, told Cointelegraph that it is “not surprising” that FTX is considering reactivating its trading platform, noting that this is the purpose of the Chapter 11 operation: The company has the ability to develop a plan to run the business and pay creditors “over time with court approval”.
He believes “the onus will be on FTX,” or the creditor who comes up with a competing plan, to show that affected users will get “a better outcome” from the reactivation plan than from liquidating the company’s assets.
However, Lin also questioned whether customers would return to trusting FTX, saying it was possible that another company looking to launch a new exchange would “use that infrastructure” rather than develop its own interface from scratch.