- FTX has decided against relaunching.
- The news has sent the price of FTT spiraling down.
- The token had played a vital role in unraveling the FTX scam.
Following the stunning collapse of FTX in November 2022, restructuring officers explored several paths to make creditors and customers whole, including restarting the defunct crypto exchange, which sparked debate and excitement among some speculators. However, the estate’s recent decision to scrap this plan due to its financial infeasibility has dashed the hopes of these speculators and sent the price of FTT, a token tied to the defunct exchange, spiraling with it.
FTT’s Future Again Looks Bleak
In a Delaware court hearing on Wednesday, January 31, FTX Attorney Andy Dietderich disclosed that the defunct exchange was abandoning plans of a reboot in favor of liquidation to pay customers following failed negotiations with potential bidders.
"FTX was an irresponsible sham created by a convicted felon. The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in a dumpster were simply too high," the attorney told the court.
FTX’s native token, FTT, unsurprisingly reacted sharply to the news, immediately tanking 35% from $3.25 to $2.11. This dump continued to $1.41 before the asset pared its losses to trade at around $2 at the time of writing.
The price reaction comes as FTT, which was previously used to get discounts on fees on the bankrupt exchange, has now become a vehicle for investors to speculate on the future of the exchange following its collapse. With the estate’s recent decision suggesting no future for the exchange, the future of the token also looks significantly bleak, with no roadmap or utility.
The Token At The Center of the FTX Scam and its Unraveling
At its peak, FTT was a highly promoted crypto, which traded as high as $84 at some point. However, following the FTX’s collapse, it has been revealed that the exchange manipulated the price of the illiquid asset and used it to inflate its value and defraud investors.
A leaked balance sheet hinting at this inflated valuation was the first to spark concern about the exchange’s financial health. These concerns worsened after FTX’s main competitor and former investor, Binance, revealed it planned to dump its FTT holdings.
On the Flipside
- According to Spot On Chain, FTX remains the largest holder of FTT, with over 70% of the supply.
- Several crypto community members had expressed that they would be reluctant to use FTX again if it restarted.
Why This Matters
The reaction of FTT to the news of FTX abandoning reboot plans highlights the pessimism surrounding the future of the token with the exchange gone.
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Read this for more on FTT:
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Bitget Joins Crypto Apps Getting Apple’s Temporary Boot
