FTX’s Full Compensation Plan: Is FTT Still Valuable?

Good news: FTX is making efforts to fully compensate, but the bad news is that FTT may go to zero.
(Prior Update:
FTX promises full compensation but victims should not be too happy, calculated according to BTC $16870, ETH $1258, SOL $16.)
(Background Information:
Cash out at the peak for 500 million pounds, escape bankruptcy…the biggest beneficiary of FTX collapse is actually a judo champion?)
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 announcement was made public through a court hearing, and U.S. bankruptcy judge John Dorsey has provisionally approved this date, although a considerable number of creditors disagree.
According to the court proceedings, FTX has abandoned its plan to relaunch its platform and instead focuses on fully repaying its former customers. The court proceedings state that FTX has abandoned its plan to relaunch its platform due to a lack of buyers. 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 lawyer Andrew Dietderich stated that the compensation process will require claimants to submit evidence to verify that they indeed held assets and suffered losses on FTX. This process will be reviewed by restructuring advisors.
Is the platform token FTT still useful?
FTX’s native token FTT briefly rose after the company’s announcement of this plan, but then sharply declined. A few days ago, the price of FTT fluctuated around $2.65 briefly, but now it has dropped to around $1.91, with a lowest point of $1.65, a 7-day decline of 27.04%.


FTT trend, source: Coinmarketcap
This market reaction was actually expected. According to the previous expectation of restarting, the appreciation of FTT was based on the possibility that FTT could still be used as the native token after FTX restarted or exchanged a certain proportion of FTT to issue new native tokens. However, this expectation was shattered when FTX announced that it would not restart. After giving up the restart, FTT has actually found no new use, and as FTX continues to liquidate assets to compensate customers, the value of FTT will inevitably further decline due to selling.
According to the worst expectations, FTT may eventually become like Luna Classic after the collapse of Terra, becoming a memecoin in practice, fluctuating with the emergence of relevant news, but it is highly unlikely to return to its previous high.
Full compensation: It’s good news, but at what point in time will the assets be valued for compensation?
FTX previously reported that there are over 36,000 claims totaling approximately $16 billion. Last year, it stated that it could only compensate about 90% of the customers. Now, the intention to fully compensate customers is naturally better news, but it also brings a question: FTX is likely unable to compensate customers based on the original types of tokens. So, if compensated based on the value in USD, what point in time will be used as the basis?
If we consider that the value of Bitcoin was around $20,000 before the collapse of FTX. If we consider the time when FTX announced bankruptcy, the value of Bitcoin dropped to around $16,000, and now it is around $43,000, with a significant difference. “Many of these claims were made based on the significant decline in the value of the currency during that turbulent period,” said Kris Hansen, lawyer for the FTX creditor committee, at the hearing on Wednesday.
According to Bloomberg, U.S. bankruptcy judge John Dorsey ruled that the size of each claim will be based on the amount owed to customers or creditors by FTX on the day it applied 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 price at the end of 2022 would cause them to miss the opportunity for digital asset price increases. Dorsey ruled that the bankruptcy rules require the company’s debts to be linked to the date it applied for court protection. Therefore, this is similar to the previously reported proposed claim values by FTX, based on the price of Bitcoin at around $16,000, which will undoubtedly cause significant losses to creditors.
Further reading:
Cash out at the peak for 500 million pounds, escape bankruptcy…the biggest beneficiary of FTX collapse is actually a judo champion?
On the bright side, if it weren’t for this current bull market starting in 2023, the remaining cryptocurrency assets after FTX’s bankruptcy may not have been enough to repay all investors. In other words, it is almost impossible to repay based on recent prices, but it is now possible to compensate based on the prices in November 2022 due to the current appreciation.
“I hope the court and stakeholders understand that this is not a guarantee, but a goal,” said Dietderich. “There is still a lot of work and risks between us and this outcome. But we believe this goal is achievable and we have strategies to achieve it.”


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FTX promises full compensation but victims should not be too happy, calculated according to BTC $16870, ETH $1258, SOL $16.