The native token of the bankrupt crypto exchange FTX has seen sharp bullish action amid looming bankruptcy distributions. FTX Token surged by more than 70% to multi-month highs on Sept. 29, briefly touching $2.70 for the first time since March 2024, according to CoinGecko data.
Rumors of Distributions Fuel FTT Rally
FTT’s rally came amid social media rumors alleging that the FTX bankruptcy estate would start distributing reimbursement funds to creditors and customers on Sept. 30. These rumors, though widely circulated, proved unfounded as the bankruptcy plan is still pending court approval. The official Chapter 11 filing reveals that a court hearing to approve the plan is scheduled for Oct. 7.
If the plan is approved, the FTX trustee will initiate distributions to creditors with claims under $50,000 by the end of 2024. However, those with larger claims may not receive distributions until the first or second quarter of 2025. The surge in FTT’s price highlights the market’s eagerness for any positive developments in the FTX bankruptcy case, with investors hoping for a potential return on their investments.
FTT’s Price History and the FTX Collapse
FTT, like many centralized cryptocurrency exchanges, launched its token shortly after debuting the platform in 2019. FTT offered multiple benefits, including trading fee discounts for users based on the amount of FTT they held. The token could also be used as collateral for futures positions on the exchange. The FTX Token reached an all-time high of nearly $80 in September 2021 but steadily declined to around $25 before FTX’s implosion in November 2022.
Following the collapse of FTX, the FTT plummeted from $25 to below $2, where it has mostly traded since. The massive sell-off of FTT in 2022 was contributed to by major crypto exchange Binance dumping its entire holdings for “post-exit risk management” purposes, as communicated by former Binance CEO Changpeng Zhao at the time. According to data from the blockchain explorer Etherscan, there are around 30,600 FTX Token holders at the time of writing on Sept. 30. FTT has a market cap of around $330 million.
The FTX Bankruptcy Plan and Distribution Timeline
The FTX bankruptcy plan, which is still awaiting court approval, outlines a distribution timeline for creditors. The plan is expected to be voted on by creditors and then go to the U.S. Bankruptcy Court for final approval. A court hearing to approve the plan is scheduled for Oct. 7, 2024, at 10:00 a.m. (Eastern Time). If the plan is approved, the FTX trustee will begin paying distributions to creditors with claims under $50,000 by the end of 2024. However, creditors with larger claims may not receive distributions until the first or second quarter of 2025.
FTT’s Future and the Impact of the Bankruptcy Distributions
The future of FTT and its potential impact on the broader crypto market hinges on the outcome of the FTX bankruptcy proceedings. If the bankruptcy plan is approved and distributions to creditors proceed as planned, it could potentially boost FTT’s price. However, the actual impact on FTT’s price will depend on several factors, including the amount of FTT distributed, the market’s overall sentiment towards FTX, and the future utility of FTT.
The Securities and Exchange Commission (SEC) may also challenge any transactions of distributions involving crypto assets to creditors. The future of FTX and its native token remains uncertain as the bankruptcy case progresses. It is crucial to stay informed about the latest developments and consider the potential risks and opportunities associated with FTT.