Bankrupt FTX wants to sell $175 million claim against Genesis to aid creditor repayment News ▸ FTX ▸ Bankruptcy
Bankrupt FTX wants to sell $175 million claim against Genesis to aid creditor repayment
Genesis claims are trading for around 65 cents on the dollar as of January ending.
2 min read
Updated: Feb. 2, 2024 at 3:00 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
FTX bankruptcy estate intends to sell its $175 million general unsecured claim against the collapsed crypto lender Genesis, according to a Feb. 2 court filing.
FTX proposed to divest these claims through public auctions or private transactions, either in entirety or in parts, with single or multiple purchasers. The generated funds would be used to facilitate debt repayment and also restructure its financial obligations to creditors.
This development aligns with FTX’s recent commitment to not resurrecting the platform, opting to liquidate assets as part of the ongoing efforts to compensate customers affected by its 2022 collapse.
Data from Claims Market showed that over $1 million in customer claims were trading at over 65 cents on the dollar as of the end of January.
FTX creditors have until Feb. 15 to voice objections to this proposed claim sale.
Genesis filed for Chapter 11 bankruptcy protection in January after the failure of FTX triggered mass customer withdrawals on its platform.
Genesis and FTX, initially engaged in substantial reciprocal claims, eventually settled with the failed exchange, holding a $175 million claim against the collapsed lender. Under the settlement agreement, both parties also relinquished other claims held against each other. Genesis Global Capital, the crypto lending arm of Genesis, had previously extended loans exceeding $2.8 billion to Alameda.
Genesis settles SEC lawsuit.
A recent court filing revealed that Genesis reached a $21 million settlement with the U.S. Securities and Exchange Commission (SEC) concerning the now-defunct Gemini Earn investment product.
“The proposed settlement will, among other benefits to the Debtors’ estates, resolve the Civil Action Claim filed by the SEC in these Chapter 11 Cases and eliminate the risks, expenses, and uncertainty associated with protracted litigation against the SEC,” the filing stated.
The filing further explained that the $21 million settlement would be disbursed after Genesis fully pays “all other allowed administrative expense, secured, priority, and general unsecured claims.”
The SEC had alleged that Gemini and Genesis violated U.S. securities laws through the crypto lending program.
Meanwhile, the company is still embroiled in a lawsuit filed by the New York Attorney General, which also involves DCG and Gemini, over allegations of fraud.
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FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Genesis
Genesis is an institutional digital asset markets and a full-service digital currency prime brokerage providing a single point of access for select qualified individuals and global institutional investors.
Gemini
Gemini is a regulated digital asset exchange and custodian that allows customers to buy, sell, store, and stake digital assets in a regulated, secure, and compliant manner.
Alameda Research
Alameda Research was once a principal trading firm, operating as an arm of the failed crypto exchange, FTX.
Digital Currency Group
Digital Currency Group’s mission is to accelerate the development of a better financial system.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.