FTT, the native cryptocurrency of the defunct FTX crypto exchange, soared Friday after the platform's founder, Sam Bankman-Fried, came out in support of a crypto influencer Ran Neuner's exchange rebirth plan.
“I continue to believe that this would be a fruitful avenue for parties to pursue! I *hope* that the existing teams will do so ”Bankman-Fried responded to Neuner's suggestion to revive FTX by producing a new FTT token and distributing it to creditors and depositors via Twitter.
Neuner, the host of CNBC's “Crypto Trader” show, which debuted in 2020, suggested transferring 100% of profits to token holders, claiming that this would restore FTX's dominance and make users whole.
“Neuner's approach is a debt restructuring plan,” said Griffin Ardern, a volatility trader with cryptocurrency asset management firm Blofin. “Sam's support for the same appears to have renewed investor hope that their monies will be returned.”
According to TradingView statistics, the FTT token increased by 47% to $1.97, the highest level since Nov. 16, following Bankman-tweet Fried's at 08:18 UTC.
This change has not been well received by everyone.
“I think this is a wonderful... second-leg-of-the-scam plan,” said Markus Thielen, head of research at Matrixport, a crypto lender.
Thielen compared the issuing of fresh FTX coins to the history of BTC-e, the Russian cryptocurrency exchange that shut down in 2017 after its founder was imprisoned for laundering $4 billion. The exchange was eventually renamed WEX and promised to restore BTC-e account holders' money. WEX, too, was shut down a year later, with $450 million allegedly taken.
Thielen sees FTX's resurrection as a tall order.
“The brand is just highly polluted,” he added, adding that swaps had a two-year “shelf life.” “Investors have demonstrated that once they have been duped out of a project or system, they just go on to the next one.”
FTX's problems began early last month, when a WikiBIT piece revealed that sister company Alameda Research was hoarding substantial amounts of the illiquid FTT tokens, indicating the two companies' extremely close relationship.
In reaction, Binance, a large cryptocurrency exchange, announced the liquidation of its FTT token holdings, prompting a bank run at FTX and forcing it to cease customer withdrawals. FTX filed for Chapter 11 bankruptcy protection on November 11.
In November, FTT fell 94% to $1.31, wiping off billions of dollars in investor value.
The bankruptcy of FTX, dubbed “crypto's Lehman moment” by many, has brought down other industry heavyweights, including lender BlockFi.
As a reminder, WikiBit is ready to help you search the qualifications and reputation of projects in a bid to protect you from hidden dangers in this risky industry!