Venture firm Tribe Capital is reportedly in talks to provide a significant capital injection to help revive the bankrupt FTX crypto exchange. According to anonymous sources, Tribe is contemplating leading a $250 million fundraising campaign, anchored by $100 million from itself and its limited partners, as it explores options to reboot or sell the FTX exchanges and create value for creditors.
Tribe Capital, What are they?
Tribe Capital, which previously invested in FTX, is a San Francisco-based venture firm with over $1.6 billion under management, investing in various startups including Kraken, Bolt, and Shiprocket. The firm’s co-founder, Arjun Sethi, met with FTX’s committee of unsecured creditors in January to discuss an informal proposal.
The bankrupt FTX crypto exchange filed for bankruptcy in November, leaving creditors with at least $11.6 billion in claims and shaking the entire market. FTX’s founder, Sam Bankman-Fried, is awaiting trial in October on charges of fraud and campaign-finance law violations. Meanwhile, FTX’s new CEO, John J. Ray III, is expected to decide in the second quarter whether a restart is feasible.
Tribe’s January proposal included approximately 9 million customer accounts and various FTX entities while excluding assets like the venture capital portfolio and certain crypto assets. The new exchange would continue using the FTX name. However, the possibility of reviving FTX faces considerable regulatory and compliance obstacles, and the timeframe for this endeavor is yet to be determined.
FTX’s exchange token, FTT, saw a 17% increase in response to the news of Tribe Capital’s potential involvement in the exchange’s revival.
Exploring Alternatives to Restart or Sell FTX Exchanges
The FTX creditors’ committee shared on Twitter that they are collaborating with the debtors to explore all alternatives for restarting or selling the FTX exchanges to generate value for creditors. They encouraged interested parties to reach out to both the debtors and the committee.
With Tribe Capital’s potential involvement, there is a chance that FTX may rise again. However, restarting the crypto exchange would require a significant cash infusion, potentially from third-party investors. FTX attorney Andrew G. Dietderich stated that the company is still in the early stages of evaluating the idea.