SEC Chairman says FTX restart is just around the corner?

On November 9, Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), personally stated that it is possible to restart FTX within the legal framework. Although it is not completely certain that FTX can be restarted 100%, it is undoubtedly a huge benefit to the crypto market and FTX platform currency FTT.

The rumors about FTX restarting have been around for a long time. Last month, Bloomberg reported that FTX was negotiating with three bidders to restart the bidding, which caused FTT to rise by about 45% in a single day. The statement made by the SEC chairman this time made FTT soar, with the highest increase of about 114.3%.

As one of the largest cryptocurrency exchanges ever, FTX has a high profile, strong software and hardware capabilities, and over 9 million customers. Earlier, the media revealed that progress on FTX’s restart would be made in mid-December. Combined with the remarks of the SEC chairman, it seems that the rumors that have been circulating for nearly a year are coming to an end.

FTX restart signal is getting stronger

As early as the beginning of this year, FTX's new CEO John J. Ray III said that a working group had been set up to discuss the restart of FTX.

In April, FTX’s fee report showed that the “FTX 2.0” restart had clearer wording and relevant information, including creating simulated transactions to test user experience, tax analysis of potential restart plans, and security analysis.

However, the outside world is not optimistic about FTX's smooth restart. Anthony Scaramucci, founder of Skybridge Capital, said that FTX cannot restart, and the restart procedure of any trading platform requires the support of creditors and bankruptcy judges. He also pointed out the key condition for the restart, namely SEC Chairman Gary Gensler, but this chairman is a "malicious regulator."

However, a court document in May showed that John J. Ray III had confirmed the FTX 2.0 plan, which included reviewing and completing the materials for restarting the 2.0 version of the trading platform, reviewing the 2.0 bid list, etc. This shows that matters related to the restart of FTX have been clearly put on the agenda.

In the second half of the year, the signals about FTX's restart became stronger and stronger, and there were constant reports from the outside world that many well-known institutions expressed interest in FTX.

In June, a court document list showed that several companies including Nasdaq, Ripple, BlackRock, etc. were interested in restarting FTX 2.0, and the company with the highest bid will become the successor.

Fortune magazine reported that according to the filing, the deadline for bidding on FTX 2.0 is September 24. FTX has contacted more than 75 bidders since May. Finally, on October 25, Bloomberg reported that FTX was negotiating with three undisclosed bidders to restart its trading platform, and the progress is expected to be announced in mid-December this year.

The three bidders are Bullish, a cryptocurrency trading platform run by Farley, fintech startup Figure Technologies and crypto venture capital firm Proof Group, according to people familiar with the matter.

But the news that ultimately caused the FTX platform currency FTT to surge was the remarks of Gary Gensler, chairman of the US SEC, who said that if Tom Farley, CEO of Block.one's crypto trading platform Bullish, or anyone else wanted to restart FTX, I would say, "Act within the law." If the new leadership team operates under the premise of a clear understanding of the law, a restarted FTX is possible.

As we all know, Gary Gensler has always been unfriendly to the crypto industry and has a strict regulatory attitude. This time, the fact that FTX has the possibility of restarting is undoubtedly an extremely obvious signal to the outside world.

However, Gensler warned: “Build investor trust in what you’re doing and make sure you’re making appropriate disclosures — and that you don’t mix all of these functions together and become counterparties to your clients or leverage their crypto assets for your own use.”

This is obviously aimed at FTX's insider trading and SFB's use of customer funds for fraudulent transactions.

The biggest incentive for the restart: SBF is found guilty

In addition to the positive remarks revealed by SEC Chairman Gary Gensler, the biggest reason why FTX was able to restart was the end of the trial of FTX founder Sam Bankman-Fried.

On November 3, according to Reuters, FTX founder Sam Bankman-Fried was found guilty. After a month of trial, a 12-member jury in the Manhattan Federal Court found SBF guilty of all seven counts.

The jury reached the verdict after more than four hours of deliberation, with prosecutors saying SBF stole $8 billion from the trading platform's customers out of pure greed.

Damian Williams, the government's chief prosecutor in charge of the SBF case, said the conviction of SBF was a "warning" to lawbreakers in the crypto industry and that federal agents and lawyers would put handcuffs on "all" fraudsters and scammers.

From the above words, we can see that the US government has already responded to the public opinion and impact of the FTX bankruptcy case at the legal level. At the same time, it also conveys that violations in the crypto market are still subject to legal judgment.

In addition, according to Bloomberg, Alameda Research CEO Caroline Ellison, FTX co-founder Gary Wang and FTX engineering director Nishad Singh are key witnesses in the SBF trial. All three said that SBF instructed them to transfer billions of dollars of FTX customer funds to Alameda (an affiliated hedge fund in which SBF holds a 90% stake) to commit fraud.

The three have pleaded guilty as part of agreements to cooperate with prosecutors, and cooperating witnesses are often given leniency, especially if they helped the government convict SBF.

Although SBF's sentencing is scheduled for March 28 next year and his defense attorney has said he will appeal the verdict, prosecutors filed a second set of charges against SBF earlier this year that required him to stand trial, including foreign bribery and conspiracy to commit bank fraud.

It can be seen that the trial of SBF has come to an end, which also shows that FTX and SBF have clarified their legal relationship. Even if the exchange is restarted in the future, it will no longer be caught in the public opinion storm due to SBF's conviction.

Microstrategy Executive Chairman Michael Saylor also said that the failure of Sam Bankman-Fried and FTX is a "process" that the crypto industry must go through, which will lead to a more stable ecosystem based on Bitcoin.

summary

SEC Chairman Gary Gensler has a significant influence on the cryptocurrency space, having been instrumental in regulatory actions against Coinbase and Binance, bitcoin ETF adoption, rules that could prevent institutions from acting as cryptocurrency custodians, and a host of legal cases.

Gensler was once regarded as the most prominent villain in the crypto space, but now that SBF has been brought to justice, his philosophy of maintaining fairness and justice in the financial industry has been upheld. There are constant rumors about the approval of the BTC spot ETF, so even if it is for the SEC to gain more control over the crypto industry, Gensler has to reiterate that the standard for FTX, which has the possibility of restarting, is within the legal scope.