FTX Bankruptcy Plan Excludes FTT Token Holders from $14.5B Compensation Package

SCENEFTX’s bankruptcy estate has announced that creditors and customers may receive $14.5 billion to $16.3 billion in compensation, excluding holders of FTX’s FTT token. While NFT holders are expected to recover their assets, FTT claims will be canceled or released. Around 98% of creditors with claims under $50,000 will receive 118% of their owed amount. FTX’s collapse was sparked by the nosedive of its FTT token, which was heavily held by Alameda Research. FTT’s value plummeted after Binance sold its FTT holdings, leading to a massive withdrawal of funds from FTX and ultimately its bankruptcy.

SCENEFTX to Compensate Creditors and Customers with Billions, but FTT Holders Excluded

SCENEFTX's bankruptcy estate has announced that creditors and customers are poised to receive a substantial compensation package ranging from $14.5 billion to $16.3 billion. However, this compensation will not extend to holders of FTX's ill-fated FTT token.

FTT Claims Canceled, NFTs to Be Restored

FTT, once the native token of the defunct FTX exchange operating on the Ethereum blockchain, will have its claims "canceled or released," according to a bankruptcy plan filed in Delaware. In contrast, those holding NFTs currently locked within the FTX NFT platform will have their assets returned.

Creditors to Receive Partial Reimbursement

Approximately 98% of FTX creditors with allowed claims below $50,000 will receive 118% of their owed amount if the bankruptcy plan is approved by the court. This payment, based on the USD value of crypto prices at the time of FTX's collapse in 2022, represents a small amount of interest on top of the funds lost by customers 18 months ago, when crypto prices were significantly lower than their current levels.

FTT Holders Left Out

Under a previous reorganization plan filed in December, creditors and customers who lost FTT during FTX's collapse were expected to receive cash payments proportional to their holdings. However, the current plan stipulates that FTT-related claims will not be compensated.

FTX Founder Imprisoned

FTX founder and former CEO Sam Bankman-Fried was sentenced to 25 years in prison in March for orchestrating a multi-billion dollar fraud scheme, including the theft of $8 billion from customers. Bankman-Fried secretly diverted funds from FTX to purchase Bahamian real estate, support venture investments, and gain political influence through donations.

FTT's Role in FTX's Downfall

FTT played a crucial role in the catastrophic collapse of FTX in November 2022. A report revealed that Alameda Research, a trading firm owned by Bankman-Fried, held $4 billion worth of FTT on its balance sheet.

When Changpeng Zhao, founder and CEO of Binance, announced plans to sell Binance's FTT holdings, the token's value plummeted, triggering a mass withdrawal of funds from FTX. Unable to process withdrawals, FTX was forced to admit that it did not hold 1:1 reserves of customer assets.

FTT's Current Value

On the day FTX filed for bankruptcy, FTT was trading at $2.62, marking a 97% decline from its all-time high of $80.50 in 2021. While the token has seen brief surges in value following bankruptcy-related announcements, it currently stands at $2.14.

FTT's Misuse

Aside from being used to inflate the balance sheets of Bankman-Fried's business empire, FTT was also employed in various dubious business transactions. Notably, a $30 million payment consisting primarily of FTT was made to former NFL star Tom Brady and his ex-wife, supermodel Gisele Bündchen, in exchange for their appearance in FTX commercials.

The bankruptcy proceedings for SCENEFTX continue, and the impact on the cryptocurrency industry and the broader financial landscape remains to be seen.