Defunct crypto exchange FTX announced its plans for rebooting the platform and paying back its creditors; the FTT token reacted by a sudden 15% surge in price.
The Restart of the FTX Offshore Exchange Will Depend on its Creditors
On July 31, 2023, the bankrupt crypto exchange FTX Trading Ltd. filed a Draft Plan of Reorganization and a Term Sheet, confirming the rumors about a possible relaunch of the platform.
According to the plan, FTX divided its claimants into different categories: FTX.com offshore exchange customers, referred to as “dotcom customers”; the U.S. exchange customers; customers of the non-fungible token (NFT) exchange; general unsecured claims; secured claims; and subordinated claims.
The international “dotcom” users have the option to pool their assets and create a “rebooted” offshore FTX exchange, not available in the US. In this case, these customers are entitled to get a stake in the new platform instead of receiving a cash payout:
“Rather than all cash, the Debtors may determine that the Offshore Exchange Company remit non-cash consideration to the Dotcom Customer Pool in the form of equity securities, tokens or other interests in the Offshore Exchange Company, or rights to invest in such equity securities, tokens or other interests.”
The proposal stated that FTX administrators will use “the waterfall approach” to determine the priority of claims. This means that each class will receive a pro-rata payout from the pool of remaining assets after the payout to the preceding class is finished.
What about FTT and its Holders?
In response to the news, the FTX token jumped by about 15% reaching the mark of $1.55, even though it pulled back to $1.4 shortly after.
However, the plan clarified that the FTT holders won’t receive any compensation for their losses as their claims are to be canceled and extinguished:
“Claims by holders of FTT (whether or not held on any FTX exchange), preferred stock and equity investors in the Debtors and related claims. All these claims and interests will be canceled and extinguished as of the Effective Date and holders will not receive any distribution.”
Moreover, there are rumors that the FTX token will be eliminated altogether, and the claimants will receive their payout in USD as of the date of bankruptcy. It’s also worth mentioning that FTT was previously labeled an unregistered security by the US Securities and Exchange Commission (SEC).
The FTX Drama Continues
The defunct exchange still struggles to deal with other consequences of its sudden fall in November, 2022. Earlier today, it has been announced that FTX almost reached a resolution in its dispute with another bankrupt crypto company Genesis.
Meanwhile, ex-CEO of FTX Sam Bankman-Fried is still facing seven charges related to wire fraud, securities fraud, and money laundering, partly for misappropriating the FTX customer funds. As of recent developments, Bankman-Fried agreed to a gag order while waiting for an update on his bail status.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.