In the aftermath of FTX’s collapse, the once-prolific crypto exchange has outlined a novel proposal to organize its creditors. The intricate plan envisages the creation of various categories of claimants, thereby offering a potential revival pathway for one group – given their consent.
Defining the Spectrum of FTX Claimants
The proposal breaks down the claimants into multiple clusters. The initial group comprises FTX.com’s offshore exchange claimants, called “dotcom customers.” Following them, we have the U.S. exchange customers (“U.S. customers”) and then the customers from its NFT exchange. The subsequent groups consist of general unsecured claims, secured claims, and, finally, subordinated claims. General claims encapsulate those originating from Alameda’s lenders or trading partners, whereas subordinated claims include fines and tax penalties.
Decoding the Claim Payout Strategy
The pecking order of these claims is set to follow a “waterfall priorities” system. Each claim class will receive a proportionate share of the remaining funds once the preceding class’s dues are settled. The specific sequence of these payouts will be established after thorough discussions with all involved parties.
“Dotcom claimants” – former customers of FTX.com – possess the alternative to amalgamate their assets to create a novel entity. That could be an “offshore exchange company” or a rejuvenated platform restricted from operation within the U.S. borders.
The proposal stipulates that the debtors might accept non-cash remuneration instead of an all-cash settlement. It could take the form of equity shares, tokens, or other interests in the new exchange, or rights to invest in such equity securities, tokens, or other interests.
Hints at an Imminent Rebirth of FTX
There have been murmurs of a potential FTX resurgence, with previous documents filed by interim CEO John Ray III referencing a possible “FTX restart” or a “2.0 reboot.”
Yet, there is a significant omission in the restructuring blueprint. A legal personality from the crypto Twitter scene, Wassielawyer – a Singapore-based, anthropomorphic penguin – pointed out the lack of provision for FTT holders.
In a December complaint against FTX’s co-founder Gary Wang and former Alameda Research CEO Caroline Ellison, the SEC labeled FTT as security. The document states unequivocally, “No Holder of an FTT Claim shall receive any Distributions on account of its FTT Claim. On and after the Effective Date, all FTT Claims shall be canceled, released, and extinguished and shall be of no further force and effect, whether surrendered for cancelation or otherwise.”
This restructuring plan for the defunct FTX crypto exchange leaves stakeholders in anticipation and uncertain, with many questions still needing to be answered.