You know that classic zombie movie scene where everyone thinks the monster is dead, but suddenly it’s not?
FTX, the bankrupt crypto exchange that imploded last year, has recovered over $7.3 billion in cash and cryptocurrency assets, the company’s lawyer Andy Dietderich said in a court hearing on Wednesday a report from Reuters. That number is up more than $800 million from January’s recovery statistics, Dietderich added.
He attributed this rise in large part to the overall surge in cryptocurrency values since last fall. Bitcoin prices, for example, are still low more than 26% since that time last year, but up to more than 56% in the last 6 months, at the time of writing.
The attorney noted that FTX’s new leadership is beginning to consider a revival as their treasury grows againstart exchange. “The situation has stabilized and the dumpster fire is out,” Dietderich reportedly said in Delaware’s Chancery Court.
So will FTX customers get their lost funds back? From the Reuters report, the answer remains unclear. The deceased, poorly managed crypto company around $9 billion in customer funds disappeared. US depositors have not yet received any of that money back. All FTX subsidiaries and affiliated exchanges only FTX Japan has released client funds because of Japan’s strict crypto regulations. Elsewhere, savers who lost their money were left uncompensated.
And somehow, the decision of whether the remnants of FTX should return those funds to the people who were spurned by the company, or go back to business, is a difficult one for FTX’s new leadership to make.
“It’s not clear if FTX should use its own funds to reStart exchanging instead of using the money to pay customers back, Dietderich said. Restarting the exchange could require debt financing or a sale of the exchange’s assets,” Reuters wrote.
To fight its way out of bankruptcy, FTX doesn’t necessarily have to return customer funds. Other past crypto bankruptcy judgments exempted companies from this obligation. But FTX must repay its many debts to creditors (including Margaritaville and Doordash). To do that, the company will likely need even more capital than it currently has.
Meanwhile, Sam Bankman-Fried (aka SBF), the exchange’s fallen co-founder and former CEO, is still around is awaiting trial on 13 fraud, conspiracy and campaign finance charges— to which he has pleaded “not guilty.” Other former FTX executives, Nishad Singh, Caroline Ellison and Gary Wang have also done so was charged with fraud. All three pleaded guilty.