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Thursday, December 7, 2023

Court approves Genesis settlement of $175M to FTX, expunges billions in claims

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A New York bankruptcy judge has approved a settlement between bankrupt cryptocurrency firms FTX and Genesis Global Trading (GGC), allowing FTX-affiliated Alameda Research to receive $175 million from GGC.

The United States Bankruptcy Court for the Southern District of New York gave the green light to the settlement agreement between FTX and GGC’s parent company Genesis Global Holdings in a filing submitted on Oct. 11.

After approval, Genesis debtors are officially authorized to enter into and perform under the settlement agreement and pay $175 million to FTX.

In conjunction with approving the settlement amount, New York bankruptcy Judge Sean Lane has also expunged multiple claims by the FTX debtors against Genesis.

According to the filing, the court has accepted the withdrawal of a large number of claims, including three claims by FTX Trading, six claims by Alameda Research, and six claims by West Realm Shires Services, which represents FTX US.

The approved settlement marks a significant reduction from the amount originally claimed by FTX debtors, who collectively asserted claims totaling around $3.9 billion in May 2023. The FTX claims included roughly $1.8 billion in loan repayments allegedly made by Alameda to GGC, $1.6 billion of assets allegedly withdrawn by the Genesis debtors from FTX and other assets.

Genesis previously reportedly said the settlement was “fair and equitable” and would allow the company to avoid pursuing “protracted litigation,” the outcome of which would be “inherently uncertain.” On the other hand, FTX creditors expressed discontent over the settlement and urged the Official Committee of Unsecured Creditors of FTX to contest the agreement in August 2023.

Related: Caroline Ellison provided 7 ‘alternative’ balance sheets hiding Alameda’s exposure to FTX

The FTX exchange collapsed in November 2022, triggering a massive contagion in the cryptocurrency industry. Crypto lending firm Genesis was one of many companies affected by the failure of FTX due to its exposure to FTX, with its derivatives business losing access to $175 million worth of crypto assets locked away in an FTX trading account. After halting withdrawals in November 2022, Genesis filed for bankruptcy in January 2023.

Genesis’ settlement with FTX comes amid the ongoing trial of FTX founder Sam Bankman Fried, who faces 13 charges like fraud, money laundering and bribing officials.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

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