Some crypto industry commentators have expressed skepticism about FTX CEO John Ray’s vision to revive crypto exchanges, citing trust issues and the “second-class” treatment of customers as some of the reasons why users may not “feel safe to return.”
Former FTX CEO Sam Bankman-Fried tweeted on January 20 praising John Ray for looking at the revival of FTX, suggesting it was the best move for its customers.
I’m glad Mr. Ray finally paid lip service to turn the exchange back on after months of squashing such efforts!
I’m still waiting for them to finally admit FTX US as solvent and give their money back to their customers…https://t.co/XjcyYFsoU0https://t.co/SdvMIMXQ5K
— SBF (@SBF_FTX) January 19, 2023
This comes after John Ray told the Wall Street Journal on January 19th that he is considering reviving the crypto exchange as part of an effort to create more users.
Ray noted that despite top executives being accused of criminal conduct, stakeholders have shown interest in the possibility of the platform’s comeback – seeing the exchange as a “viable business.”
In a comment to Cointelegraph, Binance Australia CEO Leigh Travers believes it will be difficult for FTX to secure its license again, especially as the industry moves into a new year with increased regulation and oversight by regulators.
Travers also noted that since the closure, FTX users have migrated “to other platforms, such as Binance.” He asked whether the user would “feel safe to return.”
He spoke of the fact that FTX’s governance and controls were being questioned, with administrators sharing details about some clients receiving “preferential treatment,” including a “backdoor switch.” Travers noted:
“How will users be happy to return to a platform that treats some clients as second class?”
Digital asset lawyer Liam Hennessy, a partner at Australian law firm Gadens, thinks it will be “very difficult” for FTX, due to reputational damage and lack of trust, for customers or investors “to come back.”
Hennessy also doubts whether FTX will be re-approved for a license, saying it’s “one big question mark” that depends on jurisdictions.
The lawyer believes that in some offshore jurisdictions, it would be easier for the exchange to obtain a license agreement, but it would be pointless if the user did not intend to return.
“To jump, major jurisdictions will be set such as the US, UK and Australia will be a serious challenge.”
related: FTX has recovered more than $5B in liquid cash and crypto: Report
Meanwhile, RMIT University Blockchain Innovation Hub senior law lecturer Aaron Lane told Cointelegraph that it is “not surprising” that FTX would consider reviving the exchange’s business, stating that the purpose of the Chapter 11 process is to give the company the ability to propose a plan to open business and pay debt again “for a period of time with the approval of the court.”
He believes that “the onus will be on FTX,” or the creditor who filed the competing plan, to show that the creditor will get a “better result” under the revival plan compared to FTX’s assets.
Lane, however, also questioned whether customers will trust FTX again, saying that it is possible that other companies are looking to start a new exchange “the purpose of their assets” instead of developing their own interface from scratch.