Gemini rejects Genesis, FTX proposed settlement, describes it as ‘sweetheart pre-plan deal’ News ▸ US ▸ Gemini ▸ Bankruptcy
Gemini rejects Genesis, FTX proposed settlement, describes it as ‘sweetheart pre-plan deal’
Another creditor group claims Genesis is buying FTX's support through the settlement.
2 min read
Updated: Sep. 1, 2023 at 12:04 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Crypto exchange Gemini rejected the proposed settlement deal between bankrupt crypto platform FTX and Genesis, according to an Aug. 31 court filing.
Gemini posited that the proposed settlement between the failed firms is an attempt to manipulate the voting process for the bankruptcy plan, further describing it as a “sweetheart pre-plan deal” designed to benefit only Digital Currency Group (DCG), the parent company of Genesis, at the expense of other creditors.
Earlier this month, Genesis and FTX revealed that they reached an agreement on their debt claims against each other. Per the details, the settlement would allow Alameda Research, the sister company of the failed crypto exchange, to claim $175 million from Gemini as against the original claim of $3.88 billion. On the other hand, Genesis would forgo its $226 million claim against FTX.
At the time, the bankrupt firms claimed the deal was fair and provided a path of reorganization for them.
Gemini contends that Genesis pursued this arrangement due to its inability to secure creditor backing for its bankruptcy proposal, opting to employ FTX to influence the voting process.
Gemini and Genesis once collaborated substantially through the Gemini Earn program.
However, the exchange has pursued legal action against DCG, the bankrupt lender’s parent company, alleging that it knew the lender had been bankrupt since 2022 but failed to inform investors.
Gemini claims Genesis owes its 232,000 Earn users more than $1 billion.
Another creditor group rejected the deal.
Meanwhile, an “ad hoc group” of creditors known as the Fair Deal Group also objected to the proposed deal in principle between Genesis and FTX.
The group asked why Genesis wants “to cram down a settlement with FTX on their creditor body, which overwhelmingly opposes this settlement, rather than leave the issue to creditors in a post-confirmation trust.”
The group describes Genesis’s actions as “a perversion of the Chapter 11 process.” It wrote:
“[Genesis], by entering into the Proposed Settlement, have sought to buy the support of the FTX Debtors, and their votes.”
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Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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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.
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.
Digital Currency Group
Digital Currency Group’s mission is to accelerate the development of a better financial system.