The controversial FTX User Debt (FUD) token issued by unknown ‘DebtDAO’ soared in price to unexpected heights on Monday, resulting in a decision to burn 18 million tokens to bring its value back down to its initial supposed representation of FTX’s debt.
DebtDAO’s bond token, FUD, was issued last week as an alleged portrayal of FTX’s debt. Each token was meant to have a value of $1 which amounted to around $100 million owed to FTX creditors.
“After FTX restores the database or FTX officially confirms the actual debt of the creditor, DebtDAO will issue a secondary public offering based on the actual amount of the debt and issue airdrops to all FUD holders,” Huobi chair Justin Sun explained.
Monday’s unprecedented price surge to a high of $113 has hiked up the debt’s supposed valuation to over $220 million, CoinDesk reports. In response, DebtDAO has decided to burn 18 million FUD tokens in order to bring the debt valuation back down to what it considers ‘fair value.’
DebtDAO FUD token remains opaque and dubious
Huobi released a statement on Tuesday morning announcing the FUD token burn. The exchange said that holders of current FUD tokens don’t need to take any action and that the value of tokens holding FUD will “appreciate ten times.”
“After the destruction, the total issue will become 2 million FUDs and change from the initial 1 FUD=1 USD equivalent claim to 1 FUD=10 USD equivalent claim with an additional early bird airdrop value, and the recommended price of FUD will fluctuate between 0<1 FUD≤50 USDT after the destruction,” Huobi wrote.
The exchange, run by Tron founder Justin Sun, shared high praise for DebtDAO in its announcement: “Huobi has always been committed to the philosophy of supporting quality assets and encouraging outstanding projects to explore and move forward in the industry. After communication and discussion with DebtDao, Huobi will support DebtDAO’s proposal to destroy FUD.”
However, FUD lacks proper information and procedures which make it a risky purchase. As Protos reported on Monday, DebtDAO’s Twitter account is only a few days old, has no website, and has only posted a few times. More importantly, there is no official connection between the project and FTX creditors.
It’s unclear whether FUD actually represents FTX debt or if the token even represents anything. And while Sun has insisted that Huobi had no exposure to FTX, he’s been far less open about his personal exposure.
It’s unclear whether Sun has purchased any highly-opaque FUD tokens or whether he has profited from the surge in value.