FTX Warns of Fake ‘Debt Tokens’ Trading on Exchanges
The restructuring team overseeing the FTX bankruptcy today warned investors to be on the lookout for scam tokens that aim to take advantage of the collapsed cryptocurrency exchange’s troubles.
“The FTX Debtors remind stakeholders to be on alert for scams from entities claiming to be affiliated with FTX,” the company tweeted. “The FTX Debtors have not issued any debt token, and any such offers are unauthorized.”
“Debtors” in this instance essentially means the company itself while “creditors” are those entities to which the company owes money (like its customers).
The FTX Debtors remind stakeholders to be on alert for scams from entities claiming to be affiliated with FTX. The FTX Debtors have not issued any debt token and any such offers are unauthorized. All announcements will occur through this account and https://t.co/5G4nXK4kJr
— FTX (@FTX_Official) February 17, 2023
While FTX did not mention a token by name, the subject of FTX’s warning is likely a new token called “FTX Users’ Debt,” or FUD, listed on Justin Sun’s Huobi exchange as of February 7.
The token hit a high of $80.13 on the day it launched, though trading on the token only generated around $1.8 million in 24-hour volume. The price of FUD has since been in free-fall, currently trading for $15.73, according to data from CoinMarketCap. The token only trades on Huobi and only against two stablecoins, Tether (USDT) and USDD. It has generated less than $250,000 in trading volume in the past day, according to CoinMarketCap.
FTX filed for bankruptcy on November 11, with its founder, Sam Bankman-Fried, resigning as CEO. The exchange collapsed following a bank run on the platform that drained liquidity and forced the company to admit it did not hold one-to-one reserves of customer assets. Bankman-Fried has since been arrested and charged with eight financial crimes in connection with the collapse of FTX.
Authorities allege that FTX was criminally mismanaged, and with billions of dollars now missing, former customers are currently in the dark as to whether they’ll ever again see funds they held on the exchange. To add insult to injury, scam tokens like FUD may now be draining even more of these customers’ cash.
What the hell did Huobi list? FTX User Debt (FUD tokens)
Shouldn’t the fair price be between $1 – $5?
Can’t they describe their mess with a readable, understandable statement?https://t.co/gclwH1UsQl pic.twitter.com/FK8nOHdB6k
— Romano (@RNR_0) February 8, 2023
Led by Tron founder Justin Sun and headquartered in Seychelles, Houbi laid off 20% of its employees earlier this year, joining the likes of Coinbase, Crypto.com, and Kraken in making sweeping cuts to staff amid a brutal bear market.