Kraken's Jesse Powell Says FTX 2.0 'Worse Than Starting From Scratch'

Crypto exchange Kraken's co-founder Jesse Powell on Wednesday voiced his skepticism about the proposed restructuring plan for beleaguered FTX FTT/USD.

Kraken Co-Founder On FTX: Powell's remarks come in the wake of FTX's announcement detailing its proposed restructuring plan, which aims to revive the exchange as an offshore entity.

Powell, in his statement, expressed doubts about the viability of the proposed FTX 2.0.

"FTX 2.0 would be worse than starting from scratch. No team, no tech, no licenses, no banking, tarnished brand. The trustee should just auction off the domain and trademark to the highest bidder. Anything beyond that is simply a fee extraction attack on delusional creditors."

The Background On FTX's Restructuring: FTX's restructuring plan, submitted July 31, outlines the company's approach to resolving what it describes as an "exceptionally large and complicated collection of claims." 

The plan identifies 13 classes of claims, including specific categories for Dotcom customer entitlement claims, U.S. customer claims and non-fungible token customer claims.

The proposed global settlement will require the valuation of claims in U.S. dollars based on a valuation methodology prepared by FTX, which is yet to be approved by the Bankruptcy Court.

This includes disputes over assets held on the FTX.com and FTX US exchanges.

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FTX's plan involves the identification of three main recovery pools that will correspond with segregated assets attributable to FTX.com customers, FTX US customers and assets the company argues are not attributable to the two defunct exchange branches.

A separate classification will be provided for users who held NFTs.

The document acknowledges special “shortfall” claims by the two FTX exchange organizations against this third pool of general assets.

This is intended to “compensate” the exchanges for the unauthorized borrowing and misappropriation of assets that former CEO Sam Bankman-Fried and his close associates are alleged to have committed.

The filing also indicates the intention to cancel intercompany claims and the “extinguishment of FTT claims." 

This specific clause suggests that holders of FTT will not receive any compensation for their token holdings. The collapse in the value of FTT played a crucial role in FTX's downfall in 2023.

The final part of the proposed plan covers the intention to liquidate FTX's estates to make cash distributions to customers and creditors.

Yet a clause mentions that customers may be offered voluntary choices in connection “with a restart of an offshore exchange.”

This would allow certain creditors to choose a share of equity, tokens, and other interests in a potentially rebooted offshore FTX exchange.

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