FTX restarts "broken dream" FTT becomes "air currency"

Recently, new news has come from FTX, which is deeply involved in debt disputes.

As we all know, the FTX explosion in October 2022 almost ignited the entire media and investment circles, but this year, except for the creditors, they are still paying attention to the court trial. In addition, as FTX’s various behind-the-scenes operations surfaced, other people in the industry often mentioned this institution in a rather disdainful and judgmental manner.

And this news is closely related to creditors. The creditors finally got what they wanted recently. In the latest court meeting, FTX stated that it is expected to pay the creditors in full, and the funds are expected to be paid before the end of the second quarter of 2024. And the bad news is, compensation will not be paid at the current price. On the other hand, different from the previous caliber, FTX said that there is no hope of restarting, and this is also difficult for FTT holders to accept.

In this way, the news this time is just like the normal situation of encryption-some people are happy and some are sad.

FTX, the unspeakable secret of the encryption market

In the crypto circle, FTX is undoubtedly an absolute star company. Before October 22, it could be called the upper-class representative of the crypto circle, but after October, it became the top representative of the crypto circle. Everyone calls it a cancer.

As for FTX’s bankruptcy, I will not go into details here, but briefly mention its total debt. On November 11, 2022, FTX, then the world’s second largest cryptocurrency platform, announced through its official social media account that FTX Trading Company, FTX America, Alameda Research, and approximately 130 other affiliates had filed for bankruptcy in accordance with the U.S. Bankruptcy Code. 》Chapter 11 begins voluntary bankruptcy proceedings in the District Court of Delaware. At the time, the Wall Street Journal stated that FTX’s funding gap was approximately $8 billion. However, as the trial continued, the total amount of claims continued to grow, and eventually there were more than 36,000 claims, with the total amount of claims being approximately US$16 billion.

High arrears have a profound impact on the crypto community. In fact, throughout 2023, the crypto market is still digesting the negative impact of FTX. The most significant price performance was that Bitcoin once fell to US$16,000 in 2023. After the first anniversary of FTX's bankruptcy, the trading volume of market makers was almost halved, and the trading volume of each exchange was also reduced by half. In addition, external effects such as the continuous tightening of regulations and the continued deepening of partisan games have emerged. It can be believed that FTX has played a key role in shaping the current encryption landscape.

Even after the ETF is passed, FTX’s debt sell-off still has a greater impact on the prices of Bitcoin and other currencies, but with the As the sell-off progresses, the data suggest that this impact is gradually diminishing. As of January 22, 2024, the FTX institution has liquidated all 22 million shares of GBTC it holds, including approximately 20,000 BTC.

FTX public position data at the end of August 23, source: coingecko

< strong>It is precisely because of its far-reaching impact that the restart of FTX has attracted so much attention. Although it has many problems of its own, the key to its difficulty in surviving cash flow is the liquidity environment under the previous macro tightening, and as the former second It is not nonsense for a large exchange, which once had 9 million customer data, to restart.

FTX’s restart “wolf is coming”, FTT “meme” is beginning to appear

Discussions about restarting first began in January 2023, when FTX’s newly appointed CEO John J. Ray III stated in a public interview that it had established The special operations group is open to restarting exchange operations and says customers agree with FTX’s technology. Of course, it had been less than three months since FTX went bankrupt at that time, and the news did not cause any splash in the market.

Following up, news about restart continued. Not only have the law firms of the FTX Official Committee of Unsecured Creditors held seminars on the topic of restarting many times, but some creditors have also jumped out and said they are positive about restarting. In FTX’s court hearing documents, you can also see financial statements related to "restarting". detail. However, creditors' optimism was mostly seen by the market as an unwinding operation. At that time, the leakage of more details about FTX once again deepened the impression that it was fraudulent and disrespectful to investors, and the market was still highly skeptical of its restart.

The reversal came from the court hearing in April. In the early morning of April 12, Andy Dietderich, a lawyer from the FTX law firm Sullivan Cromwell, stated at a court hearing in Delaware that FTX had recovered US$7.3 billion in assets, including US$2 billion in cash, US$4.3 billion in A Cryptocurrencies, $300 million in securities, $600 million in investments receivable, etc. It also mentioned in court for the first time that FTX is considering reopening exchange operations at some point in the future, and FTX's creditors are expected to convert their claims into shares in the reopened exchange.

As mentioned before, the market rumored that FTX had a funding gap of US$8 billion, and it had recovered US$7.3 billion in April, which undoubtedly injected a shot into the market. A shot in the arm. Affected by this news, FTT rose rapidly, reaching a maximum of 3 USDT that day, an increase of more than 90%.

Due to FTX’s previous highlight moments, some investors firmly believe that it can start over. In this context, the restructuring of FTX is undoubtedly a huge benefit to the platform currency FTT, and its once glorious historical price has filled the imagination of investors. Since then, restart has become a key word for FTT holders. As long as the news of restart comes out, FTT will show a rising trend. The meme nature of FTT is beginning to appear, and FTX has lived up to expectations and has been reporting good news one after another.

In May, John J. Ray III confirmed the FTX 2.0 plan and put the restart on the timeline; in June, a court document list showed Many companies, including Nasdaq, Ripple, BlackRock, etc., are interested in restarting FTX 2.0. Then on October 25, Bloomberg reported that FTX was negotiating with three undisclosed bidders to restart its trading platform.

Informed sources stated that FTX, which has 9 million customers, received attention from more than 75 institutions during the auction process, but it went through multiple rounds of negotiations and considerations. Finally, 3 potential buyers stood out. The three are Bullish, a cryptocurrency exchange owned by Block.one that hired former New York Stock Exchange President Tom Farley to run, Figure Technologies, a financial technology startup, and Proof, a crypto venture capital firm that participated in the bankruptcy acquisition of Celsius and invested in Aptos and Sui. Group. The acquisition offer will be submitted to the Bankruptcy Court of Delaware for review and will be finalized in mid-December 2023.

On November 9, Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), publicly stated that it is possible to restart FTX within the legal framework. . Stimulated by a series of positive news, FTT quickly rose by 40% within one hour that day. After the acquirer was disclosed, off-site users were also ready to move. At that time, community sources said that FTX might pay a 50% discount (50%) from the price on the day it filed for bankruptcy on November 11, and would need to pay a handling fee of about 5%.

With the support of various news sources, FTT prices have continued to remain above US$2. Even the news of the liquidation of the Bahamas entities in December was dismissed by investors. Seen as a precursor to restart, FTT rose to a maximum of $5.54 on December 11.

Some communities are confident in restarting, source: Binance Square

The dream of restarting is broken, but creditors have good news

But FTT’s beautiful dream finally had no choice but to stop.

In the latest court documents released on January 28, the documents showed that FTX’s compensation was in the second quarter of 2024, but it was not yet able to fully repay all creditors. losses, there are still some cryptocurrencies that have not yet been liquidated and are waiting or being liquidated.

It is worth noting that the FTT recovery is clearly described in the document, indicating that the basic value of FTT is zero. The court held that FTT is merely a utility token that has no value outside of an operating exchange that does not currently exist, and that any current market price for FTT is speculative. In other words, FTT is an air currency, and there will be no FTX exchange using FTT as the platform currency in the future. Even if FTX is restarted as a 2.0 platform, FTT will not have anything to do with it. In fact, from the perspective of U.S. regulatory requirements, compliant exchanges should not issue coins, which is why Coinbase chose the capital route of listing.

FTX court trial document record, source @Phyrex_Ni

Updated Cruel news followed. On January 31, at the latest court hearing, FTX lawyer Andrew Dietderich said that FTX did not intend to relaunch the platform, and the companies that the platform spent hundreds of millions of dollars to acquire proved to have no actual value. , there are not many interested buyers. He also said that although FTX has a large number of customer resources, the team is still unable to find investors willing to invest huge amounts of money to restart the exchange.

Fighted by the news that there was no hope of restarting, FTT suffered a heavy setback, once falling to $1.65 and now trading at $1.73, a drop of 37.44% in 7 days.

FTT price drops rapidly, source: Binance

But different Despite the sadness of FTT holders, there is good news for creditors’ claims.

As the crypto market continues to rise in recent months, FTX said it expects to have sufficient funds to fully pay all approved customers And creditor claims, based on the value of the Top 10 assets previously announced by FTX, as of February 1, this part of the recovered assets has exceeded 7.83 billion US dollars.

Of course, although the assets are sufficient to compensate, it is obvious that creditor compensation will not be based on the highest market value, but based on the value on the filing date of the claim, which date Concentrated around November 22. For example, when FTX declared bankruptcy, most currencies had already experienced huge depreciation. BTC was quoted at approximately US$16,000. However, today, BTC has reached US$43,000. Creditors obviously cannot compensate at the highest price, but can only compensate at the highest price. The price submitted for recovery will be the basis. In addition, the compensation will be based on US dollars. U.S. Bankruptcy Judge John Dorsey ruled that the size of each claim will be based on the amount owed to customers or creditors on the date FTX filed for bankruptcy.

The currency standard has changed to the US dollar standard. Naturally, some creditors are dissatisfied with this compensation method. But at least it is precisely because of the improvement of the current market that FTX is able to obtain sufficient capital appreciation to compensate for debts incurred in the bear market. Even if the compensation is not the highest amount, it is undoubtedly a blessing in misfortune for creditors. However, according to lawyers, full compensation is not a guarantee, but only a goal. Whether compensation can be paid still depends on the specific circumstances.

Looking back at SBF, which has been imprisoned, it may only last for another 3 months, but the outcome will be different, but time cannot be suspended , things will never come back again, and the market will eventually hammer down investors who do not respect users and do not follow objective laws. Just recently, the flow of $400 million in cryptocurrency on the day FTX declared bankruptcy was also discovered. The thief was a large-scale SIM card criminal gang, not SBF as everyone had guessed. Adding the news of FTX's settlement, we don't know what we are facing. How would SBF feel about the 115-year sentence.

As for FTT? The hype should come to an end, because whether it is restarted or not, the currency has been declared worthless, let alone it is certain that it will not be restarted. But in the end, FTT may not return to zero, but remain as a meme symbol. After all, in the encryption market, everyone can meme, and animal coins can be rampant. And wouldn’t the legendary FTT be more in line with the standard?