FTX creditors misled as token value jumps 50% on repayment rumors News โธ FTX โธ Bankruptcy
FTX creditors misled as token value jumps 50% on repayment rumors
An FTX creditor said the firm's repayment plan would only return around 25% of the failed exchange users crypto assets.
2 min read
Updated: Sep. 30, 2024 at 10:57 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Bankrupt FTX’s native FTT token has spiked by around 50% during the past day amid false rumors of upcoming credit repayments.
Data from CryptoSlate shows that FTT peaked at $2.75โits highest value since Marchโbut has slightly retraced to $2.14 as of press time.
This represents a 56% increase over the past week and a 71% rise in the last month. Additionally, trading volume for FTT skyrocketed by over 1,600%, surpassing $360 millionโmore than half of this activity took place on Binance.
FTT’s spike in value is surprising, considering the token’s limited utility beyond speculation. However, market observers have attributed the surge to developments in FTX’s ongoing bankruptcy proceedings.
False repayment rumors
Recent rumors circulating on social media falsely suggested that FTX would begin creditor and customer repayments on Sept. 30. However, the court has not approved any repayment plan.
According to court filings, Judge John T. Dorsey will preside over the next hearing on FTX’s restructuring plan, which is scheduled for Oct. 7.
If approved, claimants with amounts under $50,000 could begin receiving payments by late 2024. Those owed larger sums may have to wait until mid-2025.
Sunil Kavuri, an FTX creditors’ representative, also debunked the rumor and reiterated that repayments depend on the court’s approval of the restructuring plan. He stated:
“Large accounts [are] spreading false information [that] FTX distribution has started and/or start on 1st Oct etc and $16 billion inflow.”
FTX repayment plan
Meanwhile, FTX’s proposed repayment plan continues to face resistance from creditors, especially after new information about the firm’s plan for its shareholders has emerged.
According to a court filing, FTX’s debtors allocated 18% of proceeds from government forfeitures to a special fund for select shareholders, capped at $230 million.
This arrangement, made on Aug. 28, was not disclosed until Sept. 27, the final day for the estate to file the amended plan. Notably, FTX creditors, unaware of this provision, had already voted in favor of the plan by the Aug. 16 deadline.
This news sparked considerable outrage among FTX creditors. Kavuri pointed out that creditors might only recover 10-25% of their assets due to the firm’s plan to base its payouts on the petition date valuation.
According to him:
“[This is] a quick estimate of how much petition date is going to pay us vs. current value e.g BTC [was] 16k [as of petition date] vs.[its current price of] 65k.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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FTX is a cryptocurrency derivatives exchange that offers futures, leveraged tokens and OTC trading.
Bitcoin
$97,041.61
Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
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.