FTX 2.0 Reveals Plan to Pay Creditors in Cash: Is This Goodbye to FTT?

FTX 2.0 announces bold creditor repayment plan amid bankruptcy reorganization, opting to reimburse customers in cash.
FTX 2.0 considers relaunching offshore exchanges as part of restructuring efforts.
Legal action taken against founder and team in a bid to recover questionable transactions.

In a move to restore investor confidence and tackle creditor payments amidst bankruptcy reorganization, FTX 2.0 Group recently revealed its draft-creditor repayment plan. This plan marks a significant departure from the past, as the exchange announces its decision to cease the issuance of its native cryptocurrency, the FTT token. Instead, the company aims to reimburse customers with cash for legitimate claims.

Can they make a ‘U-Turn’ in their public image? Let’s find out.

Fine-Tuning the Future

To ensure a well-thought-out plan, FTX 2.0 seeks valuable input from stakeholders, intending to fine-tune the approach based on their feedback. The company proposes to evaluate customer claims in USD, taking into account the bankruptcy date. Court documents reveal that the restructuring plan involves repaying creditors by utilizing assets associated with various sectors of the business.

In an effort to revamp the exchange, FTX 2.0 also considers the possibility of relaunching its offshore exchanges as part of the restructuring efforts.

The Three Recovery Pools

Creditor repayments will be channeled through three recovery pools, encompassing assets from FTX.com customers, FTX US customers, and assets unrelated to the exchanges. However, it’s important to note that while the proposed creditor classes are expected to be impacted, full compensation might not be feasible for all.

What About the FTT Tokens?

As part of the plan, FTX 2.0 has decided against any recovery of the FTT tokens due to their “equity-like characteristics.” This decision aligns with the US bankruptcy reorganization plan, where equity components are typically wiped out. John J. Ray III, the Chief Restructuring Officer of FTX, expressed satisfaction in promptly filing the plan and reaffirmed the company’s commitment to collaborate with creditors in the coming months. He also revealed the intention to submit an amended plan later in the year’s fourth quarter.

More Power to the People!

While the plan remains in its preliminary stages and open to further modifications, FTX proposes a voting process for all seven groups of creditors. This includes FTX.com customers, FTX US customers, and non-fungible token holders, providing them with an opportunity to voice their opinions on the plan.

A Battle for Justice

In a notable move last month, FTX 2.0 took legal action against its founder, Sam Bankman-Fried, and his team. The exchange seeks to recover a significant portion of questionable transactions, accusing the defendants of misusing funds for luxurious condominiums, political contributions, speculative investments, and personal ventures. The company labeled this series of events as “one of the largest financial frauds in history.”

While the native coin initially suffered a severe blow, plummeting from $80 to $1.50 since the news broke, there are signs of improvement with a recent 10% increase in the current rate.