Lawyers handling the FTX bankruptcy case are considering offers that could eventually lead to a relaunch of the troubled exchange.
At an Oct. 24 hearing of the United States Bankruptcy Court in the District of Delaware, Kevin Cofsky of Perella Weinberg Partners revealed he is negotiating with several parties interested in purchasing the company.
Cofsky, an attorney specializing in restructuring and liability management, told Judge John Dorsey that an initial 70 inquiries have been reduced to just three final buyers. But the exact structure of the sale and what kind of exchange might emerge thereafter is unclear.
Any potential relaunch of the company would have to contend with the severe reputational damage done to it. For that reason, industry experts are skeptical that a simple reboot of FTX is even possible.
Debra Nita, senior crypto public relations strategist at YAP Global — an international PR agency specializing in crypto, Web3 and decentralized finance — believes the FTX brand is too far gone to recover.
“The reputation and viability of FTX as a business is likely irreparable at this stage,” Nita told Cointelegraph. “The ability for a brand to recover comes down to several factors, primarily due to the nature and extent of the scandal. Secondary factors include the stability and strength of business operations when it failed, and the kind of response delivered after the initial downfall.”
With millions of customers out of pocket and former CEO Sam Bankman-Fried recently found guilty of seven counts of fraud, the damage to FTX is considerable. Past examples of financial misconduct or carelessness illustrate how difficult it is for exchanges to regain investor trust.
Damaged beyond repair
In January 2019, New Zealand exchange Cryptopia suffered a series of hacks to the tune of $30 million.
Cryptopia was down for two months as its founders formulated a rescue plan. Even as they sifted through the ashes, executives assured customers the damage was minimal. According to Cryptopia, the lost money amounted to a “worst case” of only 9.4% of its total funds.
Through March and April of that year, the exchange carried on, bringing various services back online in a staggered relaunch. By May, it was all over. The damage to Cryptopia’s systems, as well as its reputation, was simply too much to overcome.
Cryptopia is far from an isolated case. Enron, MF Global and Mt. Gox are further examples of companies so utterly compromised by their respective…