FTX is negotiating with three bidders to restart crypto exchange

FTX Trading is considering proposals from three bidders to restart trading on what had been one of the world’s biggest crypto exchanges before the company sank into bankruptcy amid fraud allegations.

The company will make a decision about how to proceed by mid-December, the company’s investment banker, Kevin M. Cofsky of Perella Weinberg Partners, said Tuesday during a court hearing in Wilmington, Delaware. FTX is negotiating details of potentially binding offers with investors, Cofsky said.

Options include selling the entire exchange, including a valuable list of more than 9 million customers, or bringing in a partner to help restart the exchange, Cofsky told US Bankruptcy Judge John Dorsey. FTX is also mulling a reboot of the trading platform on its own, he said.

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“We are engaging with multiple parties every day,” Cofsky said, without disclosing the names of the bidders.

Since filing for bankruptcy last year, FTX has been trying to raise money to repay creditors. FTX’s administrators have so far recovered about $7 billion in assets, including $3.4 billion of crypto, according to court documents.

FTX and its main creditor groups have tentatively settled some of the most difficult disputes in the case, which will allow the company to file a detailed payout plan in December, company attorney Andrew Dietderich said in court.

In bankruptcy, such plans typically give creditors an estimate — expressed as a percentage — of how much they can expect to recover. FTX, however, doesn’t currently know what customers will get back, Dietderich said. The recovery percentage will in part depend on how much value FTX can get from a potential sale, or reboot, of the exchange.

FTX’s founder, Sam Bankman-Fried, resigned as chief executive last year after the company shut down the trading platform to deal with financial turmoil. Bankman-Fried is currently on trial in New York on charges that he funneled FTX customer money into another firm he controlled. That money was allegedly used to make risky trades, political donations and to buy expensive property before both companies collapsed.

The case is FTX Trading Ltd., 22-11068, US Bankruptcy Court for the District of Delaware.

© 2023 Bloomberg

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