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FTX abandons restart plan, compensation becomes new focus.

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At what point in time does FTX make payouts? What is the future of FTT?

Original Title: "FTX Announces No Restart, FTT Reborn as Meme"

Original Author: jk, Odaily Star Daily

On Wednesday, January 31st, local time in the United States, the bankrupt cryptocurrency exchange FTX stated in court that it expects to fully repay its customers. This statement was made public during a court hearing, and US bankruptcy judge John Dorsey has tentatively approved the date, although a considerable number of creditors disagree with this.

According to the court proceedings, FTX has abandoned its plan to restart its platform and is now focusing on fully repaying its former clients. FTX abandoned its plan to restart its platform due to a lack of buyers, according to the court proceedings. Advisors conducted a thorough search in the market to find investors willing to restart FTX, but no one was willing to provide the cash needed to restart the exchange.

FTX lawyer Andrew Dietderich stated that the repayment process will require claimants to submit proof to verify that they do indeed hold assets and have suffered losses on FTX. This process will be reviewed by restructuring advisors.

Is the platform coin FTT still useful?

The native token FTT of FTX briefly rose after the company's announcement of this plan, but then sharply fell. A few days ago, the price of FTT briefly fluctuated around $2.65, but now it has dropped to around $1.91, with a low of $1.65 and a 7-day decline of 27.04%.

FTT trend, source: Coinmarketcap

This market reaction is actually expected. According to the previous expectations of the restart scenario, the appreciation of FTT is based on the possibility that FTX may still reuse FTT as the native token after the restart, or exchange a portion of FTT to release new native tokens. However, this expectation was shattered when FTX announced that it would not restart. After giving up the restart, FTT actually has no new use, and as FTX continues to liquidate assets to compensate customers, the value of FTT will inevitably further decline due to selling pressure.

According to the worst-case scenario, FTT may eventually become a "memecoin" in fact, like Luna Classic after Terra's collapse, fluctuating with the appearance of each relevant news, but it is highly unlikely to return to its peak of that year.

Full compensation: It's good news, but at what point in time is the asset price compensated?

FTX previously reported that there were over 36,000 claims totaling approximately $16 billion. Last year, it stated that it could only compensate about 90% of its customers. Now, the plan to fully compensate customers is a better news, but it also comes with a problem; FTX may not be able to compensate customers in the original token types. So, if compensation is made based on the value of the US dollar, what is the time point for the value of the US dollar?

If the value of Bitcoin was around $20,000 before the FTX crash. According to the time FTX announced bankruptcy, the value of Bitcoin dropped to around $16,000, and now it is around $43,000, a huge difference. "Many of the claims are based on the significant drop in currency value during that turbulent period," said Kris Hansen, lawyer for the FTX creditors committee, at Wednesday's hearing.

According to Bloomberg, US bankruptcy judge John Dorsey has ruled that the scale of each claim will be based on the amount owed to customers or creditors by FTX on the day it filed for bankruptcy. Dorsey also approved rules for estimating the amount owed to each creditor and customer. Some customers complained that fixing their claims at the end-of-2022 prices would cause them to miss out on the opportunity for digital asset price increases. Dorsey ruled that bankruptcy rules require the company's debt to be tied to the date it applied for court protection. Therefore, this is similar to the claim value proposed by FTX previously reported by Odaily, which will be compensated based on the price of Bitcoin at around $16,000, undoubtedly causing significant losses to creditors.

On the positive side, if it weren't for this round of bull market starting from 2023, FTX's remaining cryptocurrency assets after bankruptcy may not be enough to repay all investors. In other words, it is almost impossible to repay at current prices, but this round of appreciation has made it possible for FTX to pay back at the price of November 2022.

"I hope the court and stakeholders understand that this is not a guarantee, but a goal," said Dietderich. "There is still a lot of work and risk between us and this outcome. But we believe this goal is achievable, and we have a strategy to achieve it."