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Bankrupt FTX Proposes to Restart Int'l Exchange, FTT Holders Left Hanging

FTX has proposed to restart its international exchange, but FTT holders are left in limbo.
Creator: Sergei Elagin | Credit: Shutterstock

NASSAU, BS – In a recent court filing on July 31, the bankrupt cryptocurrency exchange FTX has submitted a proposal to restart its international exchange, provided that offshore customers agree to the terms outlined in the plan. The proposal aims to address the diverse range of creditors by categorizing them into groups, each with distinct implications for their claims.

Proposal Outlines

According to the filing, FTX has classified its creditors into various categories, one of which is referred to as the "dotcom customers," encompassing its international users. Other categories of creditors include FTX.US customers, users of its NFT exchange, general unsecured claims, secured claims, and subordinated claims. Subordinated claims creditors pertain to debts with lower repayment priority, such as fines and taxes owed to authorities, while general claims creditors include Alameda Research trading partners and lenders.

The proposal outlines a priority-based approach, wherein each class of creditor will receive a pro-rata payout from the remaining assets after payments to the class above them. However, international customers have the option to combine their assets and establish an offshore exchange that would not be accessible within the United States, instead of receiving cash payouts. These customers would have a stake in this rebooted offshore platform, potentially receiving non-cash consideration in the form of equity securities, tokens, or other interests in the Offshore Exchange Company.

FTT Holders Left in Limbo

While the proposal offers an avenue for international customers to remain involved in the exchange, FTT holders face a different fate. According to the plan, FTT holders would not be compensated for their losses, as their claims would be "canceled, released, and extinguished" on the effective date of the proposal.

Following the court filing, the price of FTT experienced fluctuations. FTT has seen an 8.46% increase over the past 24 hours, with an initial surge of 21%. The token peaked at $1.64 before retracing to $1.45 as of press time.

Despite the proposal's intentions, it has encountered opposition from FTX's unsecured creditors. The Unsecured Creditors Committee (UCC) has expressed dissatisfaction, claiming that the proposal disregards their suggestions. Previously, the UCC had recommended its chosen crypto experts to take charge of post-reorganization entities. Additionally, they advocated for the creation of a regulatory-compliant recovery token and a fair allocation of value to the most affected creditors.

FTX Liquidators Criticized

The UCC further criticized the FTX liquidators for their lack of action in implementing their recommendations, including the investment of part of the cash balance into treasury bills or engaging in staking and other monetization schemes.

As the court considers the proposal and the concerns raised by the unsecured creditors, the future of FTX's international exchange remains uncertain. The fate of offshore customers and the potential establishment of an offshore exchange will depend on the outcome of these deliberations. In the meantime, FTT holders face the prospect of losing their claims entirely, adding further complexity to the restructuring process of the once-prominent cryptocurrency exchange.


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