FTX reboot could falter due to long-broken user trust, say observers
Crypto industry observers have questioned whether customers or investors will ever want to come near FTX again. 2373 Total views 12 Total shares Listen to article 0:00 News Own this piece of history
Collect this article as an NFT Several crypto industry commentators have expressed skepticism about FTX CEO John Rays vision to potentially reboot the crypto exchange, citing trust issues and second-class treatment of customers as reasons why users may not feel safe to go back.
Former FTX CEO Sam Bankman-Fried tweeted on Jan. 20 praising John Ray for looking at a reboot of FTX, suggesting it is the best move for its customers.
I’m glad Mr. Ray is finally paying lip service to turning the exchange back on after months of squashing such efforts!
I’m still waiting for him to finally admit FTX US is solvent and give customers their money back…https://t.co/XjcyYFsoU0https://t.co/SdvMIMXQ5K SBF (@SBF_FTX) January 19, 2023
This came after John Ray told The Wall Street Journal on Jan. 19that he was considering reviving the crypto exchange to make the users whole.
Ray noted that despite top executives beingaccused of criminal misconduct, stakeholders have shown interest in the possibilities of the platform coming back seeing the exchange as a viable business.
In comments to Cointelegraph, Binance Australia CEO, Leigh Travers, believes it will be difficult for FTX to secure a license again, particularly as the industry moves into a newyear with increased regulation and oversight by regulators.
Travers also noted that since the closure, FTX users have migrated to other platforms, like Binance. He questioned whether those users will feel safe to go back.
He addressed the issue of FTX governance and controls, with administrators sharing details about some clients getting preferential treatment, including back door switches. Travers noted:How will users feel comfortable going back to a platform that treated some clients as second-class?
Digital assets lawyer Liam Hennessy, a partner at Australian law firm Gadens, thinks that it would be very difficult for FTX given the reputational damage and lack of trust to get customers or investors to come near them again.
Hennessy was also skeptical whether FTX will ever get approved for a license again, saying that it is one big question mark which entirely depends on jurisdictions.
The lawyer believes that in some offshore jurisdictions, it will be easier for the exchange to get license approval, but it will be pointless if its users do not intend to return.To jump through the hoops the major jurisdictions will set such as the US, UK and Australia will be a serious challenge.
Related: FTX has recovered over $5B in cash and liquid crypto: Report
Meanwhile, RMIT University Blockchain Innovation Hub senior law lecturer, Aaron Lane, told Cointelegraph that it is not surprising that FTX would consider reviving the exchange business, stating that is the purpose of the Chapter 11 process giving the company the ability to propose a plan to run the business and pay the creditors back over time with the courts approval.
He believes that the onus will be on FTX, or a creditor that files a competing plan, to show that creditors will get a better result under the revival plan compared to liquidating FTXs assets.
Lane however also questioned whether customers will ever trust FTX again, saying it is possible that another company looking to launch a new exchange purposes those assets rather than developing its own interface from scratch. #Bitcoin #Cryptocurrencies #Law #Government #Ethereum #Bitcoin Regulation #Cryptocurrency Exchange #Binance #Sam Bankman-Fried #FTX #Regulation Related News What is total value locked (TVL) in crypto and why does it matter? Opinion: Bots are a critical tool for retail investors Why is the crypto market down today? Crypto Twitter confused by SBFs $250M bail and a return to luxury FTX former lead engineer in talks with federal prosecutors in Bankman-Fried case