Last month the beleaguered cryptocurrency exchange FTX Trading Ltd., under new CEO John J. Ray III, hitched its future to an audacious plan. Still staggering from massive losses, the company proposed a daring scheme to “reboot”, offering claimants equity in a fresh offshore entity.
The public responded with a mix of fascination and skepticism. While some lauded it as an innovative recapture of lost value, others highlighted the complexity and secrecy shrouding the scheme.
The proposed reorganization plan pivots on categorizing claimants into specific groups—with users of FTX’s offshore platform dubbed “Dotcom customers,” and American subscribers as “US customers”. An intricate class system would guide resource allocation, with a spectrum spanning Other Priority Claims, to Subordinated Claims, through to Section 510(b) Claims and more.
Three main recovery pools were set to be created. Each holding assets associated with FTX.com and FTX US. The Dotcom Customer Pool consisted of claimants of the offshore exchange; the US Customer Pool housed customers of the American platform. The General Pool would harbour claims from the likes of Alameda’s lenders or trading partners, while subordinated claims would encompass taxes and financial penalties.
Importantly, the order of payouts would lean on “waterfall priorities”. Here, each class would receive a pro-rata payout from the remaining pool once previous owed monies were settled. Subsequently, the specific order of these payouts would be determined through negotiations with stakeholders.
As the offshore platform gears up for a “reboot,” third-party investors have been promised newly minted equity securities, tokens, or other interests in the exchange. However, this expansive reserve would not include US investors. This might yield more questions— are we to believe that US investors will willingly accept their peripheral status?
More concerning was the plan’s silent treatment of FTT holders. The conspicuous omission of these key stakeholders—especially after their token was added to the Security Exchange Commission’s naughty list—leaves many uneasy. Furthermore, non-customer claims such as penalties and taxes were essentially pushed to the backburner as ‘subordinated claims’.
The draft plan admirably offers a novel approach to resolving the fallout from the cryptocurrency exchange’s collapse. But, by its own admission, it is a fluid plan, open to amendments pending stakeholder feedback. Thus, the reception and effects of the proposed strategy remain to be seen.
Ultimately, will this audacious proposal spawn a glorious phoenix from FTX’s ashes or does it merely serve up a complex rehash of overly optimistic ambitions that lack robust execution plans? Only time will tell.
Source: Cryptonews
