Earlier this year, bankrupt cryptocurrency firm FTX called off plans to resurrect its exchange.
And that was a missed opportunity, some of the company’s creditors told The Wall Street Journal in a report published Thursday (March 27).
“They are responsible for destroying billions of dollars in value,” said Arush Sehgal, one of those creditors. “They had a thriving business that was the No. 2 exchange in the world, and all they had to do was turn it back on. But they failed to do so.”
As the report notes, former customers of FTX say that the company’s plan to repay them falls short, because they will receive the cash value for their crypto set to November 2022 standards, when the exchange went under.
But since then, bitcoin has ballooned in value, hitting record levels. Supporters of a relaunched FTX, the WSJ report said, argue that customers should receive shares in a new version of the exchange to help offset their losses.
FTX CEO John J. Ray III, who has overseen the company since its bankruptcy filing, told the WSJ his team carried out an extensive effort to find a buyer for the exchange or partners to merge with, but never received adequate proposals.
“In each case, no serious investor was willing to give us material value when weighed against costs, delays and other factors,” Ray said. “We did not even receive a meaningful bid for any intellectual property because the code was obsolete and the brand synonymous with fraud.”
That fraud was carried out by Ray’s predecessor, Sam Bankman-Fried, who is scheduled to be sentenced this week following his conviction in November 2023.
In a victim impact statement filed last week, Ray argued that the one-time cryptocurrency wunderkind’s statements that his former customers will be repaid in full is false.
“Customers still will never be in the same position they would have been had they not crossed paths with Mr. Bankman-Fried and his so-called brand of ‘altruism,’” Ray wrote.
Bankman-Fried faces decades in prison at his sentencing, with the prosecution asking Judge Lewis Kaplan to hand down a sentence of 40 to 50 years.
In a recent court filing last week, prosecutors argued that Bankman-Fried showed “unmatched greed and hubris” in using customer funds for risky investments and personal expenditures.
In response, Bankman-Fried’s attorneys countered that the proposed sentencing is based on a “distorted” narrative and a “medieval” view of punishment.
The defense team has already suggested a sentence of no more than six and a half years, and said in court last week that Bankman-Fried is not a “super-villain.”