Genesis seeks court approval to slash 3AC claim from $1B to $33M News โธ US โธ Avalanche โธ Bankruptcy
Genesis seeks court approval to slash 3AC claim from $1B to $33M
The settlement agreement will see Genesis pay $33 million to Three Arrows Capital.
2 min read
Updated: Nov. 10, 2023 at 12:04 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Bankrupt crypto lender Genesis has sought court approval for its proposed settlement agreement with collapsed crypto hedge fund Three Arrows Capital (3AC), according to a Nov. 9 court filing.
Under the agreement, 3AC will have an allowed general unsecured claim of $33 million against the bankrupt lender instead of the previous over $1 billion claim against Genesis. Besides that, Genesis will also relinquish all of its claims and entitlements to an undisclosed amount of Avalanche’s AVAX tokens and Near Protocol’s NEAR. The bankrupt firms will also “mutually release each other” from any remaining liabilities.
The beleaguered lender explained that the settlement was necessary to provide a smooth path for its Chapter 11 reorganization plans and to eliminate any risks and expenses that litigation might have brought.
According to the filing:
“The proposed settlement will, among other benefits to the Genesis Debtorsโ estates, significantly smooth the path to confirmation of the Genesis Debtorsโ chapter 11 plan of reorganization, prompt distributions thereunder, and eliminate the risks, expenses, and uncertainty associated with protracted litigation among the Parties.”
Genesis explained that 3AC’s $1 billion claim against it was the largest after it had resolved that of the failed crypto exchange FTX. CryptoSlate reported that FTX settled its claims with the lender for $175 million.
The company further said 3AC was one of its largest borrowers before its collapse. Per the filing, the hedge fund borrowed over $2 billion between 2020 and 2022 and still owed about $1.2 billion in unsecured claims despite the foreclosure of its collateral last year.
The proposed settlement agreement was filed at the U.S. Bankruptcy Court for the Southern District of New York and still requires Judge Sean Lane’s approval.
Other creditors like Gemini can object to this settlement before Nov. 24, and a hearing has been scheduled for Nov. 30, where the parties will have a chance to argue against the settlement terms before implementation.
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Oluwapelumi Adejumo
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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Avalancheย is an umbrella platform for launching decentralized finance (DeFi) applications, financial assets, trading and other services.
NEAR Protocol
$5.48021
NEAR is a decentralized development platform built on top of the NEAR Protocol, which is a public, sharded, developer-friendly blockchain.
Genesis
Genesis is an institutional digital asset markets and a full-service digital currency prime brokerageย 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.
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.
Three Arrows Capital
Three Arrows Capital (3AC), a Singapore-based crypto hedge fund, collapsed due to poor risk management, recklessness in dealing with business partners and a significant portion of greed.