Tribe Capital’s Involvement and Proposal
Established in 2018, Tribe was a venture investor in both FTX and FTX US. The San Francisco-based firm, which manages more than $1.6 billion, invests in various startups, including crypto platform Kraken, payment company Bolt, and e-commerce provider Shiprocket.
FTX’s new CEO, John J. Ray III, intends to determine in the second quarter whether a restart is feasible, as presented in bankruptcy court. According to FTX attorney Andrew G. Dietderich, the company is still in the early stages of examining the idea itself, adding that a restart would necessitate a significant cash infusion, possibly from third-party investors. Tribe’s proposal in January took into consideration an estimated 9 million customer accounts and a range of FTX entities. The rebooted exchange would retain the FTX name.
Challenges and Market Response
FTX’s committee of unsecured creditors stated that it is working with debtors to evaluate all options to reboot or sell the FTX exchanges, adding that no definitive timetable exists for a reboot or sale.
There is no definitive timetable for a reboot or sale of the exchanges at this time.
— Official Committee of Unsecured Creditors of FTX (@FTX_Committee) April 18, 2023
Upon the news breaking, the FTT token, native to the FTX exchange, surged more than 19% to $2.26, before coming back down to $2.07 at the time of writing, as per CoinMarketCap.
Sam Bankman-Fried’s empire imploded in November, resulting in creditors facing at least $11.6 billion in claims and a destabilized market, including around $9 billion in customer funds. Bankman-Fried, who pleaded not guilty to fraud and campaign-finance law charges, is set for trial in October. Any efforts to revive the exchange would face considerable regulatory and compliance challenges. Ray, who has guided companies like Enron Corp. through bankruptcy, described FTX as the worst failure of corporate controls he had ever witnessed.
Key Points
What is Tribe Capital’s connection to FTX?
Tribe Capital was a venture investor in both FTX and FTX US before the cryptocurrency exchange’s collapse.
How much funding is Tribe Capital considering to revive FTX?
Tribe Capital is contemplating spearheading a $250 million fundraising campaign, anchored by a $100 million contribution from the firm and its limited partners.
What is the current status of FTX’s founder, Sam Bankman-Fried?
Sam Bankman-Fried is facing trial in October after pleading not guilty to fraud and campaign-finance law charges.
What challenges would a reboot of FTX face?
A reboot of FTX would face significant regulatory and compliance challenges, as well as the need for a substantial cash infusion from third-party investors.
