FTX Relaunch Likelihood Is Low, Expert Argues Using Past Cases

• Bankrupt FTX crypto exchange explores the possibility of relaunching operations.
• Expert says the relaunch is unlikely, citing challenges in finding a willing buyer.
• FTX will consider offers that inject significant capital into the balance sheet.

In an exclusive interview, Thomas Braziel, Founder of 507 Capital, weighed in on the news of FTX considering relaunching its operations, noting that FTX is actively exploring the idea, with investment bankers accepting offers for the debtor.

While Braziel cautiously refrained from providing definitive odds on the likelihood of a relaunch, he suggested that the chances are relatively low. Drawing from past experiences with Voyager and Celsius, he questioned the feasibility of finding a party willing to pay significantly for FTX customers while investing in FTX itself.

Although the process is informal, Braziel noted that FTX’s CEO is open to relaunching FTX with the primary objective of repaying creditors in full. Where a reasonable offer arises that injects hundreds of millions of dollars into the balance sheet, FTX may seize the opportunity.

Interestingly, Braziel expects a domino effect to occur if a compelling bid, similar to Celsius, emerges. Such a bid could set the tone and inspire competing offers, ultimately shaping the structure of the relaunch.

Regarding FTX’s reported debt of $8.7 billion, Braziel clarified that the figure was based on crypto prices at the time of the bankruptcy filing in November 2022. However, he noted that there is uncertainty surrounding locked assets, particularly Solana, and decisions regarding its treatment remain unclear.

Braziel highlighted two key factors for claimants: strict compliance with know-your-customer and anti-money laundering regulations and handling treasuries with alternative projects. FTX aims to scrutinize claimants’ compliance and ensure that recoveries are based on the original assets rather than dollarizing them.