Large companies have successfully emerged from bankruptcy before. However, it has never been done by any entity in a situation like the one FTX has found itself in, according to a Blockworks analysis. Still, FTX’s current management continues to mull over the possibility — a consideration some lawyers say would take time, money and perhaps an entirely new brand to mend negative sentiment stemming from fraud allegations. FTX co-founder Sam Bankman-Fried pleaded not guilty in January to charges that include wire fraud and money laundering. John J. Ray III, the company’s new CEO, told the Wall Street Journal later that month that he created a task force that was looking into restarting the exchange. According to court filings submitted on Monday to the U.S. Bankruptcy Court for the District of Delaware, Ray has offered a list of services to the company. These include mid-April tasks such as “Review and finalize 2.0 reboot of exchange material for distribution” and “Review next steps and comment on FTX restart.” FTX has a long way to go to raise funds, clear debts and gain trust, according to Louise Abbott, cryptocurrency partner at Keystone Law. “Perhaps a step too far in the current climate,” she told Blockworks. “In addition to that, FTX has struggled with significant IT problems [and] software bugs. It is arguable that starting a new exchange altogether would be preferable.” The bankrupt exchange is expected to file its restructuring plans in this year’s third quarter, Abbott added, noting that a decision on any relaunch plans is anticipated to come by the middle of 2024.
In related news, media start-up Semafor said yesterday it has raised $19 million from investors, including Yahoo Co-Founder Jerry Yang and KKR & Co. Co-Founder Henry Kravis, to replace Sam Bankman-Fried's investment in the media start-up, Reuters reported. Semafor had been looking to buy out Bankman-Fried's investment for months, after he was charged with fraud following the bankruptcy of cryptocurrency exchange FTX in November. Last year, investigative news outlet ProPublica also decided to return $1.6 million it received from Bankman-Fried's family foundation. Founded by former Bloomberg Media Chief Executive Officer Justin Smith and New York Times media columnist Ben Smith, Semafor was launched in October. It has raised a total of $34 million so far. Read more.