- FTX has decided to end its revival efforts
- Repayment controversies and celebrity legal woes highlight crypto-market risks
FTX has announced the cessation of its efforts to revive the exchange. The decision comes after months of unsuccessful negotiations with potential investors and buyers.
End of the road for FTX
FTX attorney Andy Dietderich revealed in a bankruptcy court hearing in Delaware that the company has been unable to attract the necessary capital to rebuild the exchange. However, he expects the company to,
“have sufficient funds to pay all allowed customer and creditor claims in full.”
FTX has secured over $7 billion in assets for customer repayment. It has also negotiated with regulators to prioritize these payments before addressing approximately $9 billion in claims.
This failure highlights the underlying issues within FTX, worsened by its founder Sam Bankman-Fried’s inadequate technology and administrative foundations. Dietderich pointed out,
“FTX was an irresponsible sham created by a convicted felon.”
In November 2023, a Manhattan federal jury found Bankman-Fried guilty of seven counts of wire fraud and conspiracy to launder money. His sentencing is scheduled for 28 March 2024.
Controversy over FTX’s repayment plans
Meanwhile, customers have expressed dissatisfaction with the decision to base repayments on cryptocurrency prices from November 2022. They argue that they are being shortchanged due to the market’s recovery since then. However, U.S. Bankruptcy Court Judge John Dorsey ruled in favor of using 2022’s prices. According to him, U.S. bankruptcy laws require debts to be repaid based on their value at the time of the company’s bankruptcy filing.
FTX’s announcement signals a lengthy process ahead for customer repayments, as the company must still verify the legitimacy of each claim.
Larry David’s FTX commercial
Bankman-Fried isn’t the only one facing charges. Larry David, the renowned comedian and creator of “Curb Your Enthusiasm,” was embroiled in a controversy over his participation in a Super Bowl commercial for FTX.
Larry David reflects on his 2022 Super Bowl ad for a cryptocurrency trading platform called FTX, amid an ongoing fraud case against Sam Bankman-Fried, the company’s founder. David reunited with his “Curb Your Enthusiasm” cast members for the show’s final season premiere. pic.twitter.com/8KReLNBb3y
— AP Entertainment (@APEntertainment) January 31, 2024
Looking back at the decision, David told AP at the premiere,
“So, like an idiot, I did it. I’m in a class action lawsuit…part of my salary was in crypto, so I lost a lot of money.”
The lawsuit seeks damages for those who traded with FTX, implicating David, among other celebrity brand ambassadors such as Naomi Osaka, Tom Brady, and Gisele Bündchen.
FTT’s market performance
AMBCrypto’s analysis of FTT’s daily chart showed that the news had a significant negative impact on the market. CoinMarketCap reported that the price of FTT plummeted by approximately 30% in the last 24 hours. It fell below $2.6 and even breached the $2.3 support level, trading at $1.86, at press time.
Furthermore, the Relative Strength Index (RSI) entered the oversold territory, with a reading of 26.15. The On-Balance Volume (OBV) also saw a drastic decline, falling from 42.16 million on 30 January to -2.84 million on 1 February. This indicated a strong bearish market trend, one characterized by a lack of investor confidence and declining values.