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FTT holders excluded as FTX announces offshore exchange revival plan



FTX, the cryptocurrency exchange that faced bankruptcy under the leadership of Sam Bankman-Fried, has announced its plans to make a comeback with a renewed focus on offshore clients.

In a recent announcement, FTX solidified its intention to relaunch the cryptocurrency exchange specifically targeting offshore clients. This announcement also confirms the recent submission of a proposal to revive by the bankruptcy administrators.

However, former FTT holders have been stripped of their right to claim any compensatory benefits under the plan. The proposition, put forth by FTX, reveals no plan to offer any compensation for former FTT token holders, as they are now rendered ineligible to claim anything. 

SEC and FTT tokens

The FTT token faced scrutiny from the SEC in December 2022, and holders won’t receive any distributions as all FTT claims will be canceled from the Effective Date of the supposedly FTX revival plan, due to the complaint filed against FTX co-founder Gary Wang and former Alameda Research CEO Caroline Ellison by the SEC, stating that FTX’s exchange token, FTT, is a security.

The complaint highlighted that FTT was sold as an investment contract with profit potential, and FTX’s management team was incentivized to increase its value. In the course of the court proceedings, Ellison and Wang have pleaded guilty to the charges. 

FTX categorizing claimants 

Furthermore, the administrators of the exchange are devising strategies to categorize the creditors into different classes of claimants. One group of claimants is being offered the potential to revitalize the FTX exchange alongside external investors. However, the final decision must be reached collectively by the group before it is implemented.

The CEO, John Ray III, who took over from SBF after the collapse, in conjunction with the Chief Restructuring Officer of the FTX debtors, emphasizes their unwavering dedication to resolve the bankruptcy situation. 

The duo assured affected users that they will present a revised plan with an accompanying disclosure statement in the last quarter of 2023.

Details of the proposition revealed that the initial group of claimants comprises individuals associated with the offshore exchange, followed by customers of the US exchange, FTX.US; the NFT exchange, general unsecured claims, secured claims, and subordinated claims. 

Alameda lenders is part of the general claims category, Alameda lenders are included while subordinated claims comprise taxes and penalty fines. 

Alameda is part of the conglomerate that was under the leadership of SBF. The research firm was allegedly the recipient of funds of FTX users laundered by SBF.

The priority of assets will be determined based on “waterfall priorities,” which means every person will not be reimbursed at the time. It will be done group by group until the last designated group gets their funds back. 

Also, FTX added that while former customers have been granted the liberty to create an offshore exchange company, they can decide to forgo a cash payment for owning a stake in the company.

Read also; IRS rules staking rewards are taxable income

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