On Wednesday, January 31, local time in the United States, bankrupt cryptocurrency exchange FTX told the court that it expects to be able to repay its customers in full. The announcement was made through a court hearing, and U.S. Bankruptcy Judge John Dorsey has preliminarily approved this date, although a considerable number of creditors have expressed disagreement with it.

According to court proceedings, FTX has abandoned plans to relaunch its platform and is instead focusing on fully repaying its former customers. According to court proceedings, FTX has abandoned plans to relaunch its platform due to a lack of buyers. Advisors searched the market thoroughly to find investors willing to relaunch FTX, but no one was willing to provide the cash needed to restart the exchange.

FTX attorney Andrew Dietderich said the reimbursement process will require claimants to submit proof to verify that they actually held and lost assets on FTX. This process will be reviewed by restructuring advisers.

Is the platform coin FTT still useful?

FTX’s native token FTT briefly rose after the company’s plan was announced, but then fell sharply. A few days ago, the price of FTT had been fluctuating around $2.65, but now it has come to around $1.91, with the lowest point reaching $1.65, a 7-day drop of 27.04%.

FTT trend, source: Coinmarketcap

This market reaction is actually expected. According to the previous scenario of expecting a restart, the appreciation of FTT is based on the possibility that FTX will still be able to re-enable FTT as a native token after the restart, or to exchange FTT for the release of new native tokens according to a certain proportion. However, this expectation was shattered as FTX announced that it would not restart; after giving up the restart, FTT has actually found no new use, and as FTX continues to liquidate assets to compensate customers, the value of FTT will inevitably fall further with the sell-off.

According to the worst-case scenario, FTT may eventually become a de facto memecoin like Luna Classic after the collapse of Terra, fluctuating with the emergence of each related news, but it is highly likely that it will not be able to return to its high point of the year.

Full compensation: This is good news, but at what point in time will the compensation be based on the asset price?

FTX previously reported more than 36,000 claims totaling about $16 billion. Last year, it said it could only compensate about 90% of its customers. Now, the intention to compensate customers in full is naturally better news, but it also brings up a problem; FTX may not be able to compensate customers according to the original token type, so if it compensates according to the US dollar value, what is the US dollar value at what point in time?

Before the collapse of FTX, the value of Bitcoin was around $20,000. At the time when FTX declared bankruptcy, the value of Bitcoin was around $16,000, and now it is around $43,000, a huge difference. "Many of these claims are based on the significant decline in the value of the currency during that turbulent period," said Kris Hansen, a lawyer for the FTX creditors committee, at a hearing on Wednesday.

According to Bloomberg, U.S. bankruptcy judge John Dorsey ruled that the size of each claim will be based on the amount owed to customers or creditors on the day FTX filed for bankruptcy. Dorsey also approved rules for estimating the amount owed by each creditor and customer. Some customers complained that fixing their claims to the price at the end of 2022 would cause them to miss the opportunity for rising digital asset prices. Dorsey ruled that bankruptcy rules require that the company's debt must be tied to the date on which it applied for court protection. So this is similar to the claim value that FTX had proposed, as reported by Odaily, based on a Bitcoin price of around $16,000, which will undoubtedly bring great losses to creditors.

On the bright side, if it weren’t for this round of bull market starting in 2023, the remaining cryptocurrency assets after FTX’s bankruptcy might not be enough for it to repay all investors. In other words, it is almost impossible to repay according to the current prices, but this round of appreciation makes it possible for FTX to pay according to the price in November 2022.

“I hope the court and stakeholders understand this is not a guarantee, but a goal,” Dietderich said. “There is a great deal of work and risk between us and this outcome. But we believe this goal is achievable, and we have a strategy to achieve it.”