Huobi fell for a phishing attack? This is what Debt DAO (@debtdao), a project sharing the same name with the issuer of $FUD (FTX Users' Debt), claimed. After the brief hype at launch, $FUD has seen a sharp decrease in both token price and trading volume.
On February 5th, Huobi announced it would list $FUD. The issuer of $FUD, DebtDAO (@debtdaoio), said it was a bond token issued on behalf of FTX creditors. DebtDAO said it had been notified of a debt amount of approximately $100m by FTX creditors, which, according to Huobi, was confirmed through a contract provided by DebtDAO.
Within ten minutes after being listed on Huobi, $FUD went from $0.2 all the way up to $200. During the first 24 hours, the trading volume of $FUD was over 298k. At the beginning of this week, the token was trading at over $100.
However, the crypto community on Twitter remained skeptical about $FUD. The official Twitter account of DebtDAO was created just in February, 2023, with only 17 tweets so far. No information about its community was provided. What's more, there was an obvious mistake in DebtDAO's $FUD announcement. It said the initial supply of $FUD was 20m, and each $FUD had a value of $1, "representing 2% of FTX's debt". However, $20m should be 20% of the claimed $100m debt. The mistake is still uncorrected on its Twitter.
Some voices of doubt came from another project named Debt DAO (space between Debt and DAO), which is a crypto credit marketplace backed by Dragonfly Capital. It retweeted Huobi advisor Justin Sun's tweet, saying, "it seems you've fallen for a phishing attack from a fake account! We are the real Debt DAO - a fully onchain and trustless debt financing platform with automated repayments & recourse. Happy to chat and help build what you need."
According to lawyer and crypto KOL wassielawyer, $FUD "isn't even a debt token", but a "securitization". "This is such a terrible idea on so many levels. Also, not all debt claims are equal and fungible." he added, "this is 1000000% in breach of securities regulations."
With skepticism from the crypto community and the cooling down of the hype, the performance of $FUD started to struggle. Although DebtDAO decided to burn 90% of the supply, it didn't stop the price from going down. According to TokenInsight, the $FUD price dropped more than 40% over the last 24 hours, trading at just above $30. The token is also traded much less often, with 24h trading volume a bit over 23k, less than one tenth of it was on the first day.
It's worth noting, though, that DebtDAO said after the burn, 1 $FUD is equivalent to a $10 claim, and the recommended price of $FUD will fluctuate between 0 to $50. And the current price of $FUD is still within the range.
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