In recent developments surrounding the relaunch of the bankrupt FTX exchange, concerns have been raised by Jesse Powell, the co-founder of Kraken. Powell believes that the plans to revive FTX could potentially be detrimental, arguing that starting from scratch would be a better alternative due to the lack of resources and a tarnished brand associated with the exchange.
Jesse Powell’s Concerns
Jesse Powell took to Twitter to express his concerns about the relaunch of the FTX exchange. In response to a tweet by a former FTX user, Powell stated that proceeding with the FTX 2.0 plans would be worse than starting from scratch. According to Powell, the exchange lacks a team, technology, licenses, and banking, and has a tarnished brand. He further suggested that the FTX domain and trademark should be auctioned off to the highest bidder, referring to the relaunch as a “fee extraction attack” on “delusional” investors.
Rebuttal from FTX 2.0 Coalition
The FTX 2.0 Coalition, a group of users who are optimistic about the relaunch, criticized Powell’s comments via Twitter. They argued that the creditors are not delusional and believe in the potential success of the reboot. However, Powell stood firm on his stance and replied to the group’s tweet, stating that lawyers alone would not be able to build a secure and performant crypto exchange. He also mentioned that those with the necessary skills have better offers, and replicating the competitive advantages offered by FTX might not even be possible for a legitimate operation.
Recap of FTX Relaunch Plans
Discussions surrounding the relaunch of FTX.com began in January when the CEO John J. Ray appointed a task force to explore the possibility of restarting the international arm of the collapsed crypto exchange. In June, The Wall Street Journal reported that FTX was considering various options, including relaunching as a joint venture. The exchange also considered compensating customers by offering them a share in the new FTX.com.
On July 31, FTX unveiled a draft creditor-repayment plan, along with the proposal to reboot the international arm of the exchange, exclusively available to non-U.S. users. The plan involved categorizing claimants, with FTX.com users referred to as “Dotcom customers.” Instead of a full cash settlement, non-U.S. customers could receive non-cash consideration through equity securities and tokens.
The Challenges of Rebuilding Trust
Rebuilding trust in a tarnished brand is no easy feat. FTX has faced allegations of past misconduct, which have further damaged its reputation. To regain the trust of users, the exchange would need to demonstrate transparent and ethical practices, implement robust security measures, and establish a track record of responsible operations. It will require a significant investment of time, effort, and resources to rebuild the brand and establish credibility in the market.
The concerns raised by Jesse Powell, the co-founder of Kraken, about the relaunch of the FTX exchange highlight the challenges and risks associated with reviving a bankrupt exchange. Powell’s arguments emphasize the importance of having the necessary resources, infrastructure, and a positive brand image to ensure the success of a crypto exchange. While the FTX 2.0 Coalition remains optimistic about the relaunch, it is crucial to consider the insights and expertise of industry veterans like Powell. The future of FTX will ultimately depend on the ability to address these concerns and rebuild trust in the exchange.