FTX/comebacks: former crypto darling needs better reboot plan

Prices for FTX tokens, known as FTTs, got an unexpected jolt earlier this month. Six months after FTX collapsed, the crypto exchange platform’s lawyers suggested that it could stage a comeback. But the odds of a revival for a failed company operating with an unchanged business model and a notorious name are narrow.

Slim-chance comebacks happen sometimes. Think of the revival of Apple under Steve Jobs, IBM’s recovery following heavy losses in the early 1990s and carmaker GM’s post-bailout fortunes. For tarnished companies such as FTX, MoviePass, WeWork or SVB Capital these case studies offer a glimmer of hope.

More than $7bn has been recovered in cash, tokens and other assets at FTX. Creditors could, in theory, choose to restart the business.

But chief executive John Ray, hired to guide it through bankruptcy, has spent months highlighting its failures and those of founder Sam Bankman-Fried, who faces a number of criminal charges. Confidence in crypto has evaporated. It remains hard to insure against failures in the sector. Demand for FTX services would be low.

MoviePass also lacks the goodwill necessary to turn its fortunes round. It has emerged from Chapter 11 bankruptcy with a new cinema subscription idea. But the spectacular failure of its first plan means it is unlikely to sign the sort of attractive deals with cinema chains needed to generate profits.

Office rental start-up WeWork managed to go public via a special purpose acquisition company following its failed initial public offering and the dramatic exit of its founder. Yet even after occupancy levels improved, its business continues to burn money. Cash and cash equivalents fell from about $1bn to less than $300mn last year.

SVB Capital, the venture capital arm of Silicon Valley Bank is up for sale, and might do better. Though it reported a pre-tax loss of $180mn last year, it owns stakes in some of tech’s best-known venture capital firms.

For FTX, hope and case studies would not be enough. It needs a reworked business plan and rebranding. Even a brazen reboot cannot succeed under FTX’s tarnished name.