FTX to receive $175M withdrawing up to $1B in other claims against Genesis News ▸ US ▸ FTX ▸ Bankruptcy
FTX to receive $175M withdrawing up to $1B in other claims against Genesis
Settlement agreement green lights FTX's $175M claim and puts $1B counterclaims to rest.
2 min read
Updated: Oct. 12, 2023 at 11:50 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The bankruptcy estate of crypto lending firm Genesis Global Capital has submitted a proposed order to implement the company’s settlement agreement with collapsed crypto exchange FTX.
The proposed order was filed Thursday in the U.S. Bankruptcy Court for the Southern District of New York. It comes after Judge Sean H. Lane issued a decision on Oct. 6 approving a deal between Genesis and FTX resolving claims between the two companies.
Under the settlement, FTX will have an allowed bankruptcy claim of $175 million against Genesis based on loans Genesis made to FTX affiliate Alameda Research.
“As set forth in the Settlement Agreement, the Allowed Alameda Claim against GGC is hereby ALLOWED in the amount of $175 million.”
In exchange, FTX agreed to withdraw several other substantial claims against Genesis, totaling potentially over $1 billion.
“The following claims by the FTX Debtors are hereby deemed WITHDRAWN with prejudice and EXPUNGED”
Genesis filed for Chapter 11 bankruptcy protection in January after the failure of FTX triggered mass customer withdrawals. The company had extensive ties to FTX, with its crypto lending arm Genesis Global Capital lending over $2.8 billion to Alameda.
The settlement aims to resolve disputes over repayment of those loans. The size of FTX’s allowed claim means Genesis will likely repay only a fraction of what it loaned Alameda.
Genesis initially sought approval for the deal in August. However, major creditors Gemini Trust and an ad hoc group of Genesis lenders objected to the settlement terms.
After evidentiary hearings in September, Judge Lane overruled the objections in an Oct. 6 decision. He found the deal was reasonable given litigation risks and the potential for more significant losses if FTX’s claims remained unresolved.
The proposed order filed Thursday allows FTX’s $175 million claim and requires the withdrawal of all other FTX claims against Genesis. This implements the deal consistent with Judge Lane’s ruling.
The order still requires Judge Lane’s approval. A hearing is scheduled for Oct. 18, where remaining objectors will have a final chance to argue against the settlement terms before implementation.
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Liam 'Akiba' Wright
Also known as "Akiba," Liam Wright is a reporter, podcast producer, and Editor-in-Chief at CryptoSlate. He believes that decentralized technology has the potential to make widespread positive change.
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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.
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.