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FTX Chapter 11 trustee: Will Delaware bankruptcy court cut short John J Ray III’s reign at stricken crypto exchange?

By News

Edited by Charlie Mellor

12:50, 16 November 2022

FTX logo crumbling
John Jay Ray III. oversaw Enron’s bankruptcy proceedings – Photo: Shutterstock

When Sam Bakman-Fried (SBF) stepped down as chief executive of the now-collapsed cryptocurrency platform FTX, he handed the reigns of the stricken company over to John Jay Ray III. 

But could the US Bankruptcy Court for the District of Delaware halt the new CEO’s short tenure?

FTX token (FTT) to US Dollar

FTX, its sister firm Alameda Research and 134 affiliated companies, filed for Chapter 11 bankruptcy on 11 November following a week of struggles to satisfy their clients’ withdrawal requests.

Ray, FTX’s new CEO, was previously chief executive and then chairman at the energy trading company Enron, which famously collapsed in 2001.

The media have hailed the Wall Street lawyer for having a “reputation for boosting creditor recoveries”.


0.53 Price
-0.530% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168


0.16 Price
-2.850% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872


10.79 Price
+2.410% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.08964


3,743.08 Price
-0.220% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

An attorney, who represented the Enron entity charged with recovering money for creditors, spoke to Reuters about Ray’s uncompromising practises. Attorney John Delnero said:

“I have seen him go head to head with some of the most prominent people in the industry. John doesn’t blink.” 

But according to The Financial Times, FTX has been searching for experienced directors in bankruptcy cases to be put in charge of FTX.

This may be an “attempt to show the court that the company is capable of managing the process itself in order to maximise recoveries for creditors, said a person briefed on the reasons for the move,” reported the FT.

It may also minimise the chances that the court could appoint an independent “Chapter 11 trustee” who would replace Ray to manage FTX – a move typically made by US bankruptcy judges who believe control of the business should be taken away from the company itself, the FT pointed out.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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