FTX Bankruptcy Plans Do Not Include FTT Token Holders

FTX’s plan for paying back its creditors could leave holders of its FTT coin with nothing.

The repayment plan, filed late Monday (July 31) in federal bankruptcy court, recommends settling customer claims in cash, while also showing FTX could still relaunch as an offshore cryptocurrency exchange.

According to the filing, the plan calls for the creation of three chief recovery pools: one for “segregated assets attributable to FTX.com customers,” another of FTX US customers, and other assets that the “Debtors contend are not clearly attributable to the exchanges.”

It also recommends “the extinguishment of FTT claims in recognition of the equity-like characteristics of FTT.”

John J. Ray III, who became CEO of FTX following the company’s dramatic collapse last year, said in a news release that the debtors would now begin discussions with FTX creditors.

“Our goal is to achieve a consensual plan and emergence from bankruptcy,” said Ray. “We are committed to working through these matters in the third quarter of 2023 and to filing an amended plan and a disclosure statement in the fourth quarter of 2023.”

In a separate court filing, the official committee of FTX’s unsecured creditors took issue with the company’s plan.

The committee says it has argued that the “the millions of customers and creditors whose votes are necessary to confirm a plan” want that plan to put control of a post-reorganization FTX in the hands of parties with crypto experience.

In addition, the committee also wants to see a plan that “creates a regulatory-compliant recovery token (or tokens) and facilitates a re-started FTX exchange to enhance creditor recoveries,” while also allocating value to the creditors most harmed by FTX’s collapse.

The committee, the filing said, “is extremely disappointed” the debtors haven’t held discussions with them on these issues.

Meanwhile, the criminal proceedings connected to FTX’s downfall continue, with prosecutors last week calling for founder and ex-CEO Sam Bankman-Fried to be jailed ahead of his trial, scheduled for October.

As PYMNTS reported, the prosecution contends that Bankman-Fried had embarked on a media tour during his house arrest, sending more than 1,000 phone calls to reporters.

Those calls included several to a New York Times journalist who penned an article that involved parts of the diary of former Alameda Research CEO and FTX co-conspirator Caroline Ellison.

Bankman-Fried was at one time in a romantic relationship with Ellison. Prosecutors allege that his contact with the media amounts to attempts to “discredit and intimidate” witnesses in his case. Ellison has pleaded guilty to the charges against her and is expected to testify against Bankman-Fried at trial.

“The government has every reason to believe that he is the source for that article,” Assistant U.S. Attorney Danielle Sassoon told the judge, emphasizing that the article represented “an escalation of an ongoing campaign.”