FTT Token rises by 50% after Deception on Social media about FTX Creditors.

The native token of bankrupt FTX, FTT, surged by around 50% in the past day due to false rumors about upcoming creditor repayments. According to CryptoSlate, FTT reached a high of $2.75, its peak since March, before retracing to $2.14. Over the past week, the token’s value has increased by 56% and by 71% over the last month. Trading volume also spiked dramatically, exceeding $360 million, with the majority of activity occurring on Binance.This sudden spike in FTT’s value is notable given the token’s limited use beyond speculative trading. Market observers have attributed this to developments surrounding FTX’s bankruptcy proceedings.

False Repayment Rumors

Rumors circulated on social media suggesting that FTX would start repayments to creditors and customers on September 30, but no repayment plan has been approved by the court. Judge John T. Dorsey is scheduled to oversee the next hearing regarding FTX’s restructuring plan on October 7. If the plan is approved, those with claims under $50,000 could start receiving payments by late 2024, while larger creditors may have to wait until mid-2025. Sunil Kavuri, an FTX creditors’ representative, also debunked the repayment rumor, emphasizing that repayments depend on the court’s approval.

FTX Repayment Plan Controversy

FTX’s proposed repayment plan has faced resistance, especially after it was revealed that 18% of proceeds from government forfeitures were allocated to a special fund for select shareholders, capped at $230 million. This information was disclosed on September 27, after creditors had already voted on the plan. The provision sparked outrage among creditors, who are now concerned about receiving only 10-25% of their assets due to the payout being based on the petition date valuation. Kavuri noted that Bitcoin’s value at the petition date was around $16,000, while it currently trades at much higher levels, highlighting the disparity in potential recovery amounts.