FTT holders left hanging in proposed FTX restart plan News ▸ US ▸ FTX ▸ Bankruptcy
FTT holders left hanging in proposed FTX restart plan
FTX's unsecured creditors have opposed the restart plans because it ignores their recommendations
2 min read
Updated: Aug. 1, 2023 at 10:41 am UTC
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Bankrupt FTX has submitted a proposal to restart its international exchange if it can get the offshore customers to agree, according to a July 31 court filing.
FTX restart plan
According to the filing, FTX classified its creditors into different categories, including one that called its international users the “dotcom customers.”
Other categories of creditors include FTX.US customers, users of its NFT exchange, general unsecured claims, secured claims, and subordinated claims. The subordinated claims creditors are debts that have a lower priority for repayment, in this case, fines and taxes owed to the authorities, while general claims creditors cover Alameda Research trading partners and lenders.
The proposal stated that the priority of claims would be by the waterfall approach, with each class of creditor getting a pro-rata payout from the remaining assets after payment to the class above it.
However, international customers can pool their assets together and create an offshore exchange that would not be available in the United States instead of getting cash payouts.
These customers will have a stake in this rebooted offshore platform that may “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 interest.”
FTT holders in limbo
Meanwhile, the proposal stated that FTT holders would not be compensated for their losses as their claims would be “canceled, released, and extinguished” on the proposal’s effective date.
The proposal stated:
“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.”
FTT is up 8.46% over the past 24 hours, according to CryptoSlate data, following an initial surge of 21%. The token peaked at $1.64 before retracing to $1.45 as of press time.
Unsecured creditors oppose the plan.
However, the restart plan has faced opposition from FTX’s unsecured creditors, who alleged that the proposal ignores their recommendations.
The Unsecured Creditors Committee (UCC) pointed out that they previously asked for their selected crypto experts to be in charge of post-reorganization entities. Additionally, they recommended the creation of a regulatory-compliant recovery token and properly allocating value to the most affected creditors.
The UCC added that the FTX liquidators have failed to take active steps based on its recommendations to invest part of the cash balance into treasury bills or engage in staking and other monetization schemes.
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FTX is a cryptocurrency derivatives exchange that offers futures, leveraged tokens and OTC trading.
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
