• With a huge gap in the balance sheet, FTX has no other option than to reopen the exchange in order to make creditors whole again.
• A relaunch of FTX would encounter significant challenges including competition from the likes of EDX Markets, and Coinbase, among others.

The collapse of FTX and Alameda Research significantly devastated the global cryptocurrency industry that was grappling with the macro bear market. The ripple effects of FTX collapse are still reverberating across the cryptocurrency industry, more so in the United States which has undertaken several crackdowns on related firms. Already, Binance US and Coinbase Global have been charged by the Securities and Exchange Commission for allegedly listing unregistered tokens. In its latest defense, Coinbase has filed a motion seeking to dismiss SEC charges for lack of merits. 

Moreover, Coinbase Global argued that the SEC approved its request to go public with most of the tokens alleged to be unregistered securities listed on the secondary market. Additionally, Coinbase argued that the SEC lacks proper statutory authority from Congress to regulate the nascent crypto market. Nonetheless, the damage was already done by the former FTX officials with the trust in CEX severely tarnished.

Prepare for FTX 2.0

Unsurprisingly, the current FTX CEO John J. Ray III has severally suggested that the exchange should be revived to raise more funds for the creditors. Moreover, the exchange has immense resources but not enough to cover the financial gap left by the former administrators. According to a recent report by WSJ, FTX has opened the process for accepting new investors interested in funding the revival of the exchange.

According to people familiar with the matter who confirmed to WSJ, the current FTX CEO is already holding talks with several interested investors – including Blockchain lending company Figure – on how to fund the restructuring process.  Meanwhile, FTX has set a short period that ends this week for interested investors to file letters of intent. 

If the FTX revival goes through, the sources confirmed that creditors would be issued with a stake in the exchange among other forms of compensation. 

https://twitter.com/aftxcreditor/status/1673993381985263617?s=46&t=s5GGzrzSbSymRk5WzwDzDg

Notably, FTX operations in the United States would face regulatory scrutiny, especially now that the SEC has deemed almost all digital assets unregistered securities. Additionally, the exchange would have to convince crypto users why they should ditch other exchanges for them. Nevertheless, the new administration would largely focus on providing services to institutional and retail investors since it has deep liquidity.

Market Outlook 

Following the announcement, FTX native token FTT jumped more than 40 percent on Thursday to trade around $1.76. Interestingly, the total daily traded volume for FTT tokens jumped more than 362 percent to about $152 million. The $575 million valued market is slated to further gain in value fueled by speculation if FTX reopens operations.