360+ Companies Eager to Back FTX Relaunch
Alvarez & Marsal, legal advisor to crypto exchange FTX, made public in late June a list of companies prepared to invest in the exchange’s reboot. Despite the harshly negative publicity surrounding Sam Bankman-Fried’s enterprise, significant players have shown a readiness to back his now-bankrupt venture.
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Companies such as Nasdaq, BlackRock, Ripple Labs, Galaxy Digital, Tribe Capital, Robinhood, NYDIG, OKCoin, and many others have shown interest. Representatives from the group of FTX's misled depositors have been in contact with these companies to gauge the potential investment they could make in FTX 2.0. Experts predict that the bidding will likely take place in the latter half of 2024.
It appears that we're witnessing an attempt to put together a stalking horse bid and locate a company that will agree to voice a pre-negotiated amount – the bid that will kickstart the upcoming auction. A stalking horse offer sets a minimum bar that prevents other bidders from driving down the price of the bankrupt exchange's assets.
363 Companies Interested in FTX's Relaunch Source: Twitter
The one putting forth a stalking horse bid always obtains certain advantages. For example, such a company can negotiate which assets and liabilities it wishes to acquire. Moreover, it has the power to reshape the conditions of the auction in a way that discourages other bidders from participating.
It's important to note: a stalking horse offer is not some backroom deal. The offer gets court approval and carries legal weight. The ‘stalking horse' company can also expect a topping fee. This means an additional payment in the form of a percentage of the difference between the winning bid and the minimum price stated in the stalking horse offer.
The primary downside is the resources and time spent defining the size of the stalking horse bid. After all, no one is immune to failure. Even with extensive negotiations and thorough analysis, the initial valuation of the bankrupt's assets could still be overpriced.
It's worth noting the impressive array of esteemed companies ready to vie for the acquisition of FTX exchange. It seems these assets are only seen as toxic by the media and the affected clients. For instance, during the June Bloomberg Technology Summit, Alfred Lin, a partner at venture firm Sequoia Capital, emphasized that he doesn't see his decision to invest in FTX as a mistake.
I looked at the work we did 15 different ways. We probably would have made the investment again
he declared
As a reminder, GNcrypto previously reported that venture firm Tribe Capital could spearhead a funding round for FTX's reboot.
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