Permission-less debt marketplace Debt DAO has issued FTX Users’ Debt (FUD) tokens on behalf of FTX creditors and crypto exchange Huobi said it would list the token.
On Feb. 4, Debt Dao said its FUD token would have an initial supply and circulation of 20 million tokens, with each token priced at $1, representing 2% of all FTX debt. The permission-less marketplace added that it was notified of a debt amount of approximately $100 million by FTX creditors.
Debt DAO added that it would create more tokens when FTX confirms the actual debt and distribute the additional tokens through airdrops to FUD holders. The FUD creditors will have the first right to assert their right on the debt.
Huobi Lists FTX Users’ Debt (FUD) Token
Debt DAO’s new FUD token has already generated some interest from crypto exchanges with Huobi taking the lead. Justin Sun said that the bond tokens represent “the top quality FTX debt asset and is set to benefit everyone in the crypto world.”
“FUD token provides creditors with a new level of liquidity, allowing them to trade their FTX debt on the open market. This gives them greater control over their assets and opens up new investment opportunities,” added Sun.
Malicious actors have already tried to take advantage of the situation by producing counterfeit FUD tokens on the Ethereum blockchain. Justin Sun warned that the actual token is only on the TRON blockchain.
Crypto Community Raises Questions
The new idea of issuing new tokens to cover FTX customers’ and investors’ losses is strikingly similar to the one previously endorsed by the disgraced exchange’s founder, Sam Bankman-Fried. Crypto trader and TV host Ran Neuner suggested that FTX could be restarted by issuing new FTT tokens and distributing them to creditors and investors.
Neuner added that users would be made whole as all the exchange profits would accrue to them. SBF said the idea was a productive path for parties to explore. Still, the initiative was heavily criticized at the time as the crypto community described it as a Ponzi scheme.
It is worth noting that there is no relationship between the FUD token and the bankrupt FTX exchange. Liquidators are still trying to recover all the assets in the company and determine the creditors.
Lawyers claim the company has recovered over $5 billion in liquid assets, but debts are more than $8 billion.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.