After the news about the possibility of reopening of the bankrupt crypto exchange FTX, the exchange’s native token FTT doubled in a short time. However, a popular crypto analyst says altcoin price action could be a ‘bear trap’.
The analyst does not recommend buying this altcoin!
cryptocoin.comBankrupt cryptocurrency exchange FTX is investigating the possibility of reopening its business, according to his attorney from Sullivan & Cromwell. Chief attorney Andy Dietderich announced during a court hearing on Wednesday that restarting the stock market is one of many options being considered for the company’s future. Dietderich also noted that clients are likely to receive an interest from the stock market going forward instead of receiving their income in cash from the property.
Following the announcement, FTX’s native coin, FTT, was up almost 100% over the past 24 hours, trading around $2.32 on Thursday. However, FTT is still down more than 97% from its all-time high of around $84.18, which it achieved in late 2021. While the recent surge has revived hopes of further bullishness, popular crypto analyst Michael van de Poppe warns that currently buying FTT coins is extremely risky for crypto investors as he believes the pump could be a bear trap.
Altcoin price rises almost 100% on news of possible return of the stock market
The now-bankrupt cryptocurrency exchange FTX has hinted at a possible reboot after recovering $7.3 billion in assets in both cash and crypto assets.
At a hearing Wednesday in a US bankruptcy court in Delaware, FTX attorney Andy Dietderich noted that with this recovery, the bankrupt crypto exchange has raised over $800 million since January 2023. Dietderich also revealed that he’s thinking about the company’s future after months of hard work to gather resources and pinpoint what went wrong under the then-incriminated ex-founder Sam Bankman-Fried (SBF).
FTX capitalizes on last bull run
Dietderich linked the recent development in the FTX ecosystem to the recent surge in cryptocurrency prices. Using the November 2022 crypto prices or rates, the total recovery will be worth $6.2 billion. This was when the exchange filed for Chapter 11 bankruptcy protection after traders moved to withdraw $6 billion from the platform within three days. Worse, it coincided with its industry peer Binance abandoning a bailout deal to save FTX.
Current FTX CEO John Ray noted “improper funds transfers and poor accounting” at the booming crypto firm, tying them to failures in controls.
What the FTX reboot means for these customers
Going forward, FTX is discussing with stakeholders about a possible restart in crypto exchange operations. According to Dietderich, the decision could come between April and June 2023. Dietderich also explained what a reboot could mean for customers who have already been exposed to FTX. In particular, many customers’ crypto deposits are still locked while bankruptcy proceedings are pending.
So far, the only customers who have access to their FTX-linked funds are customers in Japan. Dietderich cites the country’s strict crypto regulations as the primary influencer of this outcome. However, FTX will need substantial capital to restart its crypto operations because the existing client interface carries little or no connection to the money movement in the backend.
Dietderich also acknowledged that it remains unclear whether the exchange will use its own funds to continue operations rather than using the money to compensate affected customers. Restarting FTX may require outside financing or selling the exchange’s assets. Some community members also share this sentiment.
Regardless, it will be difficult for the exchange to regain its trust or its position in the market, even if it restarts.
FTX is working on a preliminary Chapter 11 plan to save the company from bankruptcy. The plan will be filed by July, according to Dietderich, who highlighted many details that need to be addressed as creditors press for a stake in the firm’s assets. The plan can be approved in the 2nd quarter of 2024 at the earliest.
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