FTT Pumps as Creditors Cling to Hope for FTX Relaunch
The entire crypto world was taken aback when the Sam Bankman-Fried led, much-promising, crypto exchange FTX filed for bankruptcy in the second week of November. The news was huge for the industry, and so was its impact.
As stated in the 23-page bankruptcy filing, FTX had more than 100,000 creditors, with liabilities in the range of US$10-US$50 billion. Bankman-Fried, the celebrated owner of FTX, stepped down as the CEO of the exchange, and nearly 130 affiliated companies were part of the bankruptcy proceedings. These companies included Bankman-Fried's crypto trading firm Alameda Research, and FTX.us, the exchange's US subsidiary.
What shocked the entire industry and even beyond was that FTX went from a US$32 billion valuation to bankruptcy within a matter of a few months.
A lot has happened since then. A couple of days after the company filed for bankruptcy, it reported unauthorized access to its accounts. However, there were contradicting reports suggesting the breach was an insider job, while many believed that this was nothing but a desperate hack into FTX. Analytics firm Elliptic estimated that nearly US$500 million was missing from the exchange.
With many ups and downs since the firm went bankrupt, a new possibility of FTX relaunch is reportedly on the cards. The question is if it is even possible, or is this just another attempt at living in denial? The answer is yet to come.
Meanwhile, let us look at what has been happening at FTX of late.
A plan by Ran Neuner
On December 8th, 2022, Ran Neuner tweeted the outlines of a plan to attempt the revival of FTX. For those who are not sure of Ran Neuner, he is the co-founder and CEO of Onchain Capital, a Blockchain Investment Fund and Advisory Service.
However, his real fame stems from the fact that he launched Crypto Trader, the first global cryptocurrency show on television, featured on CNBC. Ran continues to be the host and executive producer of this popular show, which places him as one of the most discussed crypto influencers in the world.
Neuner's plans start with issuing a new FTT token, followed by its distribution to creditors/depositors. He further pushes for accruing 100% of profit to token holders, and this way, as per him, FTX will eventually become the ‘biggest exchange in the world again, and users will be made more than the whole.
The plan gained momentum after the dislodged CEO of FTX, Sam Bankman-Fried, came out supporting it. He replied to Neuner's idea, adding his own opinions to it. Bankman-Fried said that he considers Neuner's idea a “productive path for parties to explore.”
The impact on FTT's movement
Neuner's proposal and Bankman-Fried's validation of it acted as a tailwind. Between two particular time slots on the same day of December 9th, 2022, the price of FTT went up from a low of US$1.33 to a high of US$1.91. Not only did the price go up, but the trading volume, too, went up from less than 6.5 million to nearly 29 million.
As per the latest available numbers, while the 24-hours volume keeps surging, the price has somehow normalized to nearly US$1.6, with a 24-hour volume of more than 72 million.
What do we make out of it?
The crypto industry has so far been in equal splits, both over Neuner's proposal and the sudden surge in FTT price and 24-hour volume. While some see it as a silver lining, many consider this to be an attempt to deny what has already happened and gone beyond the investor community's control.
Many of Neuner's past actions have been contended and vigorously challenged in the past. For instance, earlier, he was accused of dumping an altcoin while promoting the same to his audience.
A YouTube video posted by Crypto Exposed claimed that Neuner had sold Alien Worlds tokens on the same day he performed a live interview with one of the project's team members. NeuNer had outrightly rejected the allegations as FUD.
In another instance, Larry Cermark, an investigative reporter and a former writer/researcher at Diar Newsletter, accused Neuner of failing to disclose that he was an investor in a fraudulent ‘blockchain' project he promoted on Twitter.
Neuner denied these allegations as well. He termed the claims made by Cermark ‘ludicrous'. He further clarified that he had “only ever invested “north of $300 000″ in Blockchain Terminal and never offset tokens onto other parties.”
Irrespective of the validity of these allegations against Neuner, it would not be right to make long-term assumptions on which way FTT would go based on his proposals and Bankman-Fried's approval of it.
Another crucial aspect would be to remember SEC's new guidance published as recently as December 8th, 2022. Since the guidance is seen as an aftermath of agencies failing to protect investors from potential bankruptcies, such as FTX, its impact might offset the gains made by FTT in the short run.
SEC's new guidance of crypto risks
According to the new guidance released by the SEC on Thursday, companies are now required to disclose to investors their exposure and risk to the crypto market if they are issuing securities.
More specifically, companies would now have to incorporate crypto asset holdings and their risk exposure to the FTX bankruptcy and other market developments in their public filings because – as mentioned at the very beginning of this article – FTX had more than 100,000 creditors.