In recent days, the crypto community has been swamped with FUD (fear, uncertainty, and doubt) over claims that FTX, the troubled crypto exchange, is about to distribute billions to its creditors. However, these rumors are largely inaccurate, and there’s no need for alarm.
The Rumors Circulating Online
A number of prominent voices on social media, particularly X (formerly Twitter), have fueled speculation about impending payouts from FTX, leading to confusion among investors. For example:
- MartyParty, a popular figure on X with 116,000 followers, urged people to sell assets like ETH, ADA, and DOT, warning of upcoming FTX distributions, while promoting SOL and SUI.
- Crypto advisor Dan Held, with a follower base of 720,000, further stirred up fear, claiming that “$16B in FTX distributions will begin tomorrow,” though he hinted that traders might buy back in afterward.
- Crypto Rover, followed by 840,000 users, added to the misinformation by suggesting FTX payouts would start this week.
The Facts
Despite these widespread rumors, no distributions are happening this week. According to official legal documents, FTX’s legal team is set to appear in court on October 7th to finalize a repayment plan. Until this plan is approved, no distributions will occur. Even after approval, the timeline for payments is far from immediate. Smaller claims under $50,000 might see distributions by the end of 2024, while larger creditors could have to wait until early 2025.
Clarifying the Misinformation
On September 29th, FTX creditor advocate Sunil Kavuri took to social media to call out influencers for spreading false information. Kavuri also estimated that about half of the $5.5 billion in claims wouldn’t be reinvested in the crypto market, reducing fears of a mass sell-off.
Earlier in June, Kavuri and other creditors opposed repayment plans that favored asset reimbursement instead of cash, citing the potential tax implications for creditors. Ran Neuner, a CNBC crypto trader, also clarified that any distributions would only begin 60 days after the plan’s finalization, not immediately.
Market Reactions: Misinformation Fuels Sell-Off
Despite these facts, the crypto market saw a sell-off following the rumors. By Monday morning, Asian markets had dropped by 2.7%, and Bitcoin fell to $64,500, down from $66,000 just a day earlier. This highlights how quickly misinformation can impact the market, causing unnecessary volatility.
FTT Token Surge
In contrast to the broader market decline, FTX’s native token, FTT, saw a significant price spike. The token jumped more than 50% in 24 hours, reaching a seven-month high of $2.70 on Sunday before dipping to $2.19—still an impressive 51% increase for the day. Over the past two weeks, FTT has surged over 70%, largely driven by the rumors surrounding FTX’s reimbursements. However, FTT is still down 97.5% from its all-time high of $84 in September 2021.
Bottom Line: Stay Informed and Avoid FUD
The crypto space can be unpredictable, and rumors often lead to unnecessary market swings. While FTX’s repayment process is moving forward, there are no immediate distributions happening. The legal proceedings and payouts will take time, so there’s no reason for investors to panic or make rushed decisions based on misleading social media posts.
It’s important to rely on verified information to navigate the market effectively, particularly during times of uncertainty. Keep an eye on updates, but avoid reacting to unfounded speculation.
Stay tuned for accurate news as the FTX case develops further.
