- Justin Sun revealed that Sam Bankman-Fried’s FTX exchange’s user debt had been tokenized to provide liquidity through FUD.
- The debt is tens of millions of dollars, and the early bird issuance on Huobi is at a discount, capped at 20 million.
- Crypto Twitter users have criticized the offering, citing that the FUD token sale likely violates US securities law.
Huobi Global, one of the top cryptocurrency exchanges, has listed the FTX exchange’s users’ debt as a token (FUD). Justin Sun said that the bond token FUD represents the top quality FTX debt asset and is set to benefit everyone in crypto.
Also read: Why Bitcoin is still in a bear market and what this means for BTC price?
Justin Sun lists FTX User’s debt on Huobi as FUD token
Justin Sun, a Chinese crypto entrepreneur and majority shareholder in Huobi, has announced the listing of the FTX exchange’s users’ debt token (FUD). The bond token represents top quality FTX debt asset, and Sun argues that this will benefit the crypto ecosystem.
Exciting news for the crypto community! @HuobiGlobal has listed @FTX_Official Users' Debt Token (FUD). This bond token represents the top quality FTX debt asset and is set to benefit everyone in the crypto world. Stop FUD and trade FUD on @HuobiGlobal! https://t.co/NXaOAr6HO5— H.E. Justin Sun₮ (@justinsuntron) February 5, 2023
Sun argues that the FUD token provides creditors with a new level of liquidity, allows them to trade their debt in the open market and gives them greater control over their assets. This would open up new opportunities for investment in the debt token.
The founder of Tron told market participants that it had been confirmed through a contract provided by DebtDAO that the debt is in the tens of millions of dollars. The early bird issuance phase will sell FTX the debt at a discount. 1 FUD = $1, and the FUD token’s initial issuance and liquidity are 20 million. The fair price is at 0 < 1 FUD ≤ 5 USDT.
After FTX restores the database and confirms the actual debt of creditors, DebtDAO will issue a secondary public offering based on the exact amount of the debt and issue airdrops to all FUD holders. The fair price will be less than or equal to 1 USDT.
Sun explained that if the actual amount of the debt is confirmed to be $60 million through the FTX database or published debt information, an additional 40 million FUD will be issued in addition to the initial 20 million FUD.
The first issuance of FUD is at a discount; users holding 1 FUD before the secondary public offering will receive an additional 2 FUDs from the airdrop.
Will FUD make users whole after the losses from the FTX exchange collapse?
Debt token issuance is expected to cover the amount of FTX’s user debt and reimburse users in USDT. Market participants on crypto Twitter have voiced their concerns against the token sale. Crypto Twitter believes that FUD token sale could violate US securities laws.
This is 1000000% in breach of securities regulations.— wassielawyer (@wassielawyer) February 5, 2023
Imagine people being worried about their game tokens being securities. Justin lists a tranche of securitised garbage debt that may not even exist and shills it to retail investors.
Wassielawyer on crypto Twitter believes the tokenization of FTX’s user’s debt is securitization, and not all debt claims are equal and fungible.
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