Jesse Powell, co-founder of crypto exchange Kraken, recently sparked controversy by questioning the feasibility of the proposed revival plans for the bankrupt crypto exchange FTX 2.0. The bold statements made by Powell and the subsequent responses from the FTX 2.0 Coalition highlight deep divisions in the crypto community regarding the future of the once-prominent exchange.
Powell’s criticism focused on what he perceives as significant obstacles to the revitalization of FTX. In a public tweet, he stated that attempting to rebuild FTX 2.0 would be “worse than starting from scratch,” highlighting the lack of team, technology, licenses, and banking and referencing a damaged brand. He recommended that the trustee should auction off FTX’s domain and trademark, and he dismissed any further action as a “fee extraction attack on delusional creditors.”
FTX CEO John J. Ray III had previously announced the company’s intention to reboot the FTX.com exchange in June, likely under a new brand. A draft plan for a rebooted offshore exchange accessible to non-U.S. users was filed earlier this week. Still, the proposal has been met with skepticism from FTX’s unsecured creditors, who described the plan as mere “ideas” and indicated that formal talks had not yet taken place.
FTX 2.0 coalition responds: Advocates defend vision, highlight the potential for rebuilding
The words of the Kraken founder did not go unanswered. The FTX 2.0 Coalition, an alliance of FTX users advocating for a reboot, quickly countered Powell’s criticisms. They argued that the purpose of FTX 2.0 is to transfer the exchange to a competent operator with the necessary experience, resources, and alignment with creditors. The Coalition emphasized the value of 1.8 million creditor-customers, potentially turned owners, in reviving the platform. They also hinted at the growing void in the offshore derivatives market and the current legal challenges faced by Binance, the current top exchange.
Powell’s comparison of potential users of FTX 2.0 to those willing to trust in notorious entities like “Madoff enterprises” or “Enron Wifi” further intensified the debate. He dismissed the revival plan as either a “hopeless dream” or a scheme for “malicious self-promotion.”
According to the proposed FTX 2.0 plan, non-cash remuneration such as equity securities, tokens, or other interests might be provided to creditors. This could mean that the creditors would gain stock in the new exchange firm instead of receiving cash.
The public disagreement between Kraken’s co-founder and the FTX 2.0 Coalition underscores the complexity and uncertainty surrounding the attempted reboot of a once-prominent crypto exchange. It brings to light the significant challenges that must be overcome, not only in terms of technology and legality but also in rebuilding trust within the community.
Amid this ongoing debate, many questions remain unanswered. Can FTX 2.0 overcome the tarnished reputation and structural challenges to become a viable player in the crypto exchange market again? Or are the criticisms and doubts voiced by Jesse Powell and others insurmountable barriers? Only time will tell.
