FTX 2.0 would be a bad idea, says Kraken co-founder Jesse Powell

Quick Take

  • Kraken co-founder Jesse Powell casts doubt on the feasibility of FTX 2.0.
  • “The trustee should just auction off the domain and trademark to the highest bidder,” he said.

Crypto exchange Kraken's co-founder Jesse Powell questioned the viability of FTX 2.0's revival plans, citing several concerns about the now-bankrupt crypto exchange.

"FTX 2.0 would be worse than starting from scratch. No team, no tech, no licenses, no banking, tarnished brand," Powell said in a tweet today. "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."

In June, FTX CEO John J. Ray III told the Wall Street Journal that the company has "begun the process of soliciting interested parties to the reboot of the FTX.com exchange." FTX would likely rebrand as part of any restart, the news outlet said at the time, citing people familiar with the discussions.

Earlier this week, FTX filed a draft plan of reorganization in which it proposed the establishment of a "rebooted" offshore exchange available to non-U.S. users. But the official committee of FTX's unsecured creditors said it wasn't looped in on the draft plan. It also described the plan as just "ideas" and said there had been no formal talks to discuss it, indicating that an FTX reboot is far from becoming a reality.

FTX 2.0 may 'not even be possible'

But according to Kraken's Powell, lawyers aren't going to build a secure and performant crypto exchange. "People with the skill have better offers," he said. "To replicate the competitive advantages offered by FTX might not even be possible for a legit operation. Active traders moved on to other exchanges months ago."

"FTX 2.0 Coalition," an alliance of FTX users hoping for a reboot, criticized Powell for his comments. It said the idea of FTX 2.0 is to put the exchange into the hands of a competent operator with the necessary experience, resources and creditor alignment. The alliance said, "1.8 million creditor-customers turned owners are hugely valuable for bootstrapping."

The void left by FTX in the market remains and could grow further, according to FTX 2.0 Coalition, who said, "the current #1 exchange is increasingly in trouble and alternatives are lacking," likely referring to Binance, which is currently in a legal battle with the United States Securities and Exchange Commission.

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

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