Justin Sun, the founder of the Huobi exchange, has put his name behind Debt DAO, a project that claims to issue FTX users’ debt as a bond token, FUD, on behalf of FTX creditors. in a twitter threadDebt DAO said that FTX creditors have notified it of a debt of about $100 million.
DAO Debt said the bond token will have an initial supply and circulation of 20 million, representing 20% of the reported FTX debt. Each FUD token has a value of $1.
After FTX confirms the debt amount through official disclosure, Debt DAO will issue additional tokens proportional to the confirmed debt amount. These tokens will then be distributed to FUD holders via an airdrop, the Debt DAO said.
For example, if the debt amount confirmed by FTX is $60 million, Debt DAO will issue another 40 million FUD tokens on top of the initial 20 million. As per Debt DAO rules, users who have 1 FUD before the secondary public offering will receive an additional 2 FUD from the airdrop.
DAO Debt noted:
“As the most profitable and priority FTX debt in the network, FUD creditors have the first right to assert their claims on FTX debt.”
Debt DAO will issue the contracts or notarial receipts of the debt at an “appropriate time”. The DAO also urged FTX creditors with more than $10 million in FTX debt to contact the DAO for a “debt audit and issuance” to allow the debt to circulate on the secondary market.
Justin Sun Says FUD Token Will Benefit Everyone
Crypto exchange Huobi listed the FUD token for trading on February 5. According to Sun, FUD is a “high-quality FTX debt asset.” The exchange will allow withdrawals of the token on February 6.
According to Huobi, DebtDAO will do a 1:1 debt buyback for FUD holders after the airdrop.
Tron founder Justin Sun said that the FUD token will “benefit everyone in the cryptocurrency world.” According to Sun, the bond token will provide FTX creditors with a “new level of liquidity” and allow them to trade their FTX debt on the open market. He added:
“This gives them [FTX creditors] greater control over their assets and opens up new investment opportunities.
Potential breach of securities laws
A notable finance lawyer who calls himself ‘wassielawyer’ on Twitter saying FUD is definitely violating securities laws. He called the token “a tranche of securitized junk debt that may not even exist.”
It is not a debt token but a securitization, wassielawyer insisted. He aggregate:
“This is such a terrible idea on so many levels. Also, not all debt claims are equal and fungible.”
Another Twitter user equated Huobi’s FUD listing to the Pi token unauthorized listing last year. Huobi had listed the native Pi Network token last year, but the network later said the listing was unauthorized.
Meanwhile, scammers are having a field day. Scammers have started circulating counterfeit FUD tokens on the Ethereum network, according to PeckShield. Also, the FUD tokens listed on huobi are only available on the Tron network, Sun warned.
This post Justin Sun Backs FTX Debt Token ‘FUD’ in Possible Securities Law Violation
was published first on https://cryptoslate.com/justin-sun-backs-ftx-debt-token-fud-in-possible-securities-law-breach/