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What does Huobi FUD breaking through $80 mean? Crypto Lawyer: Securitizing junk debt is a clear violation of securities laws.

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What does Huobi FUD breaking through $80 mean? Crypto Lawyer: Securitizing junk debt is a clear violation of securities laws.

The Huobi exchange officially launched the spot trading pair of FUD, a user debt token on FTX, last night. The token price surged to $200 at the opening but fell to around $80 by the time of reporting. However, what does this price really signify? And why has this token attracted criticism from prominent crypto lawyer Wassie?

How to Play FUD?

According to previous reports, FUD was issued by DebtDAO and is exclusively available on Huobi, referred to as the highest quality FTX debt asset. Its operation mechanism is unique, with an initial issuance of only 20 million tokens. There will be a second public offering after FTX restores user data or confirms the total debt amount, and airdrops will be made to all FUD holders.

In other words, assuming the total debt amount is $60 million, DebtDAO will issue an additional 40 million FUD tokens. Users holding 1 FUD before the second public offering will receive 2 FUD tokens airdropped to them. After the airdrop is completed, DebtDAO will buy back all tokens from holders at a price of $1 per FUD.

Based on the above rules, the total FTX debt must be at least $1.6 billion for users who purchased FUD at $80 to receive an additional 79 tokens airdropped to them, thus avoiding losses. Ironically, before listing FUD, Justin Sun stated on Twitter that the fair price of FUD is between 0-5 USDT.

The trading volume of FUD is gradually declining, with significant price fluctuations. Exercise caution when buying and selling. Rather than being a debt token, FUD is more of a tool used to bet on the size of the FTX debt total.

Lawyer Wassie Criticizes: 100% Illegal

After Huobi announced the listing of FUD, well-known crypto community lawyer Wassie immediately criticized it, stating that FUD is not a debt token but a securitized token.

"This is a terrible idea on many levels, and not all debt claims are equal and interchangeable," said lawyer Wassie.

Furthermore, Wassie also stated that FUD definitely violates securities laws, suggesting that teams issuing tokens may be concerned about their tokens being considered securities by the SEC.

However, this is not the case for Justin Sun, who directly listed securitized junk debt that may not even exist and marketed it to retail investors.