Yahoo Finance FTX Revival Proposal Supported by Sam Bankman-Fried Lifts FTT Token
FTT, the native cryptocurrency of the failed FTX crypto exchange, surged Friday after the platform's founder, Sam Bankman-Fried, came out in support of an exchange revival plan proposed by a crypto influencer Ran Neuner.
"I continue to think that this would be a productive path for parties to explore! I *hope* that the teams in place will do so," Bankman-Fried tweeted in response to Neuner's proposal to restart FTX by issuing a new FTT token and giving it to creditors and depositors.
Neuner, the host of CNBC's "Crypto Trader" show that launched in 2020, recommended distributing 100% of profits to token holders, adding that the idea would reestablish FTX as a dominant player and make users whole.
"Neuner's proposal is equivalent to a debt restructuring plan," said Griffin Ardern, a volatility trader from crypto asset management firm Blofin. "Sam's support for the same seems to have revived hope among investors that they would get their funds back."
The FTT token surged as much as 47% to $1.97, the highest since Nov. 16, after Bankman-Fried's tweet at 08:18 UTC, TradingView data show.
Not everyone is positive on this move.
“I think this is like a perfect… second-leg-of-the-scam strategy,” said Markus Thielen, head of research at crypto lender Matrixport, on CoinDesk TV’s “First Mover” program Friday.
Thielen likened the issuance of new FTX tokens to the history of BTC-e, the Russian crypto exchange that closed down in 2017 after its founder was arrested for laundering a total of $4 billion. The exchange was later reborn as WEX with the promise of returning BTC-e account holders’ money. However, WEX, too, was shuttered a year later, with some $450 million said to be stolen.
For Thielen, FTX’s revival is a tall order.
“The brand is just extremely tainted,” he said, adding that exchanges tend to have a “shelf life” of a couple of years. “Investors have really shown that once they have been really scammed out of a project or protocol, that they just move on to the next one.”
FTX's troubles began early last month after a CoinDesk story showed sister concern Alameda Research holding large amounts of the illiquid FTT tokens, a sign of the unusually close relationship between the two entities.
In response, leading cryptocurrency exchange Binance announced the sale of its FTT token holdings, triggering a bank run-like situation at FTX and forcing it to halt customer withdrawals. On Nov. 11, FTX filed for Chapter 11 bankruptcy protections.
FTT crashed 94% to $1.31 in November, destroying billions of dollars in investor wealth.
FTX's failure, described by many as crypto's Lehman moment, has brought down several industry heavyweights, including lender BlockFi.
Update [Dec. 9, 2022 17:12 UTC]: Added comments from Markus Thielen of Matrixport.
