There is always something controversial going on in the cryptocurrency space. Huobi has decided to list a new token called FUD. That isn’t much of an issue, were it not that this token represents FTX Users’ Debt.
Cryptocurrency exchanges must get creative to attract more users and volume. In most cases, that means listing new tokens before their competitors can. It is a common practice among altcoin trading platforms to try and find “hidden gems” before anyone else.
The recent decision by Huobi to list FUD may not go over that well. It is not a random token but a digital asset representing FTX users’ debt. The bond is created by DebtDAO and designed for the highest quality creditors in the FTX collapse’s wake.
Interestingly, the FUD asset will seemingly not make its way to other trading platforms. Per the listing, the statement mentions it is “exclusively offered by Huobi”. That doesn’t mean the situation won’t change in the future, although it is a risky endeavor regardless.
The FTX users’ debt is worth tens of millions of dollars. With FUD tokens, creditors can buy the debt at a discounted rate. Moreover, the listing claims the initial issuance and liquidity is 20 million, with tokens expected to be “fairly priced” between $0 and $5. The big question is who wants to buy these tokens or trade them.
In addition, the plan is to have FTX restore the database or confirm the actual creditor debt. Following that development, DebtDAO aims to issue “a secondary public offering based on the actual debt”. Plus, they will airdrop tokens to all FUD holders, bringing the “fair price” between $0 and $1. It is expected holders with 1 FUD will receive 2 FUD from the future airdrop.
3/7 Once FTX confirms the actual debt amount through its database or official disclosure, DebtDAO will issue additional tokens proportional to the confirmed debt amount and distribute them through an airdrop to all FUD holders.
— DebtDao (@debtdaoio) February 4, 2023
Making the whole ordeal even more intriguing is the buyback plan. Following the airdrop, DebtDAO aims to do a 1:1 debt buyback for all users holding FUD tokens. That creates potential opportunities for all FUD creditors who fell victim to the exchange’s collapse.
A primary concern regarding this operation is the validity of FUD. More specifically, it is likely the bond violates securities regulations. That can prove problematic for whoever owns or trades the token, along with the Huobi exchange. In addition, these tokens will be made available to the general public, making it impossible for users to “claim” their debt in a traditional sense.
Users willing to gamble on FTX User Debt can explore the FUD/USDT and FUD/USDD markets on Huobi. The bond trades for over $57 at the time of writing after peaking at a high of $200. There isn’t much trading volume yet, as most people steer away from this controversial listing.
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