Crypto exchange FTX's lawyers have reportedly been exploring tax issues, cybersecurity implications, and testing user experience related to a potential restart of the bankrupt platform. Sullivan & Cromwell LLP, the law firm hired by FTX, billed the exchange $13.5 million for their services in February alone. The firm has been tasked with recovering billions of assets, cooperating with law enforcement, and exploring "long-term options" for the exchange.
FTX's new CEO, John J. Ray III, has expressed interest in restarting the exchange in a bid to recoup value for creditors and customers. However, it is unclear whether the management team will ultimately go ahead with the plan, and rebooting the exchange is a complex and challenging task.
The FTX exchange lacked fundamental financial and accounting controls, and “reconstruction of the debtors’ balance sheets is an ongoing, bottom-up exercise that continues to require significant effort by professionals,” FTX CEO Ray said in a report released Sunday.
Sullivan & Cromwell said the services it performs for FTX represent "one of the most complicated, multidisciplinary exercises by any law firm in any area of law." The firm has been analyzing potential security concerns related to a potential FTX exchange reboot and corresponding with cybersecurity firm Sygnia Inc. on potential reboot issues.
FTX's debtors' group declined to comment on whether the exchange is planning to reboot, and neither Sullivan & Cromwell nor Sygnia responded to requests for comment. While there are examples of companies coming back from a Chapter 11 process, such as American Airlines Group Inc. and General Motors Co., reviving the FTX exchange as a long-term business would be a "more ambitious plan" with regulatory, compliance, and reputational challenges to overcome, according to legal experts.
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