Recently, FTX 2.0 Group announced their draft-creditor repayment plan to deal with creditor payments during bankruptcy reorganization. As part of the overhaul, the exchange will no longer issue its native cryptocurrency, the FTT token, and will instead pay out cash to customers who have legitimate claims.
Is this move to rectify the company’s image? Let’s find out the company’s plan to gain the investor’s faith in the failing exchange.
FTX 2.0’s Cash Payback Plan
FTX 2.0 intends to fine-tune this approach based on feedback from stakeholders and proposes to evaluate customer claims in USD as of the bankruptcy date. According to court documents, the restructuring plan involves repaying creditors by leveraging assets associated with various sectors of the business. Additionally, FTX 2.0 has not ruled out the possibility of relaunching its offshore exchanges as part of the restructuring efforts.
The 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, the company has acknowledged that most of the proposed creditor classes are expected to be impacted, indicating that full compensation might not be feasible.
FTT Token Recovery Possible, Company Claims
As part of the plan, FTX 2.0 has decided against any recovery of the FTT tokens, citing their “equity-like characteristics.” Similar to how equity components are wiped out in the US bankruptcy reorganization plan. John J. Ray III, the Chief Restructuring Officer of FTX, expressed his satisfaction in promptly filing the plan and affirmed 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.
While the plan is still in its preliminary stages and subject to further modifications. FXT proposes for a voting process for all seven groups of creditors, including FTX.com customers, FTX US customers, and non-fungible token holders, granting them an opportunity to voice their opinions on the plan.
Any Impact on Native Tokens?
In a notable step last month, FTX 2.0 sued its founder, Sam Bankman-Fried, and his team, seeking to recover a significant portion of questionable transactions. The exchange accused the defendants of misusing funds for luxurious condominiums, political contributions, speculative investments, and personal ventures, culminating in what the company referred to as “one of the largest financial frauds in history.” While the hit was hard on the native coin as it fell the coin from $80 to $1.50 since the news broke, however, it is showing some sign of improvement with a 10% increase in the current rate.
