FTX Announces No Restart but Full Compensation for Customers

On Wednesday, January 31, local time in the United States, bankrupt

cryptocurrency

exchange FTX informed the court that it expects to fully repay its customers. This statement was made during a court hearing, and the preliminary approval for this date has been granted by US bankruptcy judge John Dorsey, although a significant portion of creditors reportedly disagrees.

Preliminary approval is a decision made by the court after an initial review of a compensation plan or settlement agreement, indicating that the court deems the plan or agreement to be generally reasonable and fair. However, final approval still requires a more detailed examination.

According to court proceedings, FTX abandoned plans to restart its platform due to a lack of buyers and will focus on fully repaying its former customers. Advisors conducted a thorough search in the market to find investors willing to restart FTX, but no one was willing to provide the cash needed to restart the exchange.

FTX was once considered a formidable competitor to leading

cryptocurrency exchange

Binance. As the bankruptcy compensation progresses, there are three key events to note：

Full Compensation Format: Token or USD？

According to Bloomberg, US bankruptcy judge John Dorsey has ruled that the scale of each claim will be based on the amount owed to customers or creditors by FTX on the day it filed for bankruptcy. Dorsey also approved rules for estimating the amounts owed to each creditor and customer. Some customers complained that fixing their claims at the end of 2022 prices would cause them to miss out on the opportunity of rising cryptocurrency prices. Dorsey ruled that bankruptcy rules require the company's debts to be linked to the date it applied for court protection. Based on the observed price trend, the payout prices are determined based on Bitcoin at around $16,000, which could result in significant losses for creditors.

The Impact of FTX's Held FTT on Market Selling Pressure

FTX's native token FTT briefly surged after the announcement of the payout news but then experienced a sharp decline. A few days ago, the price of FTT briefly fluctuated around $2.65, but it has now dropped to around $1.91, reaching a low of $1.65, with a 7-day decline of 27.04%.

The appreciation of FTT was based on the expectation that FTX might reintroduce FTT as the native token after a potential restart or exchange a portion of FTT to issue a new native token. However, this expectation was shattered with FTX's announcement that it would not restart.

According to Arkham, over 70% of the total supply, with a market value exceeding $450 million, is held by addresses associated with FTX. With the abandonment of the restart, FTT currently lacks a new purpose, and the risk for FTT is elevated as FTX continues to liquidate assets for customer compensation.

Crypto Bond Platform OPNX Announces Closure

Three Arrows Capital co-founder Zhu Su announced the closure of the crypto derivatives and claims trading platform Open Exchange due to FTX's commitment to full compensation in bankruptcy liquidation. In a statement provided by co-founder Kyle Davies on Telegram, Zhu Su stated, FTX's full compensation marks the end of the claims process, and the OX community will now focus on Ox.Fun. OXNX, formerly known as GTX, was launched in collaboration with Su Zhu and Kyle Davies of Three Arrows Capital, and Mark Lamb, co-founder of CoinFLEX. The platform supported the trading of bankrupt claims, spot, and futures derivatives, aiming to simplify the claims process and build a public market for claims trading to unlock trapped capital. However, based on data analysis, the trading activity of crypto bonds on the OPNX platform was not as expected.