Bankrupt
cryptocurrency exchange, FTX, has agreed to settle its claims dispute with
equally bankrupt digital asset lender, Genesis, by accepting a payment of $175
million to Alameda Research, its affiliated insolvent crypto hedge fund.
Earlier in May, FTX had sought court permission to recover approximately $3.673
billion in alleged transfers it made to Genesis between August 13 and November
11, 2022.
Genesis
disclosed the settlement agreement yesterday (Wednesday) in a court document it filed to seek the approval
of the United States Bankruptcy Court for the Southern District of New York
for the deal. According to the crypto lender,
which declared bankruptcy in
January, both
parties reached the deal “in principle” on or around July 20.
The
agreement trailed several weeks of back and forth between both parties to determine what is owed. In a motion filed on June 1, Genesis “sought to
estimate the FTX claims at $0,” a move that was opposed by FTX. In one of the court sittings on the matter, the bankruptcy court ordered that the case “be continued to a later
hearing.” Moreover, FTX reduced its claims against Genesis to $2 billion.
FTX asks court to settle Genesis dispute for a $175 million Genesis claim, the release of a $175 million customer claim and (near worthless) Alameda claims.
Down from first $3.9 billion to $2 billion asserted, this must be the worst deal to date, especially in light of the new… pic.twitter.com/ipxHuWMU4A
— FTX 2.0 Coalition (@AFTXcreditor) August 17, 2023
Finance Magnates reported that FTX crumbled last year following a bank run on the
crypto exchange and the revelation that the firm was using customers’ assets to
prop Alameda Research’s balance sheets. FTX subsequently filed for bankruptcy
protection in
November.
Additionally, Genesis halted withdrawal processes last November, citing an unusual surge in customer requests after FTX’s collapse. The crypto lender sought an emergency loan of $1 billion from investors before later filing for bankruptcy protection in January, Finance Magnates reported.
However,
before their fall, FTX and Genesis engaged in “a large number of complex transactions”
involving fiat currency and digital assets between February
6, 2019, and
November 11, 2022. Owing to these transactions, FTX’s bankruptcy estate owes over
$350 million in customer, avoidance and loan claims to
Genesis, the defunct crypto lender claimed.
Terms of the Agreement
Meanwhile, if the settlement is approved by the
court, both parties have resolved to let go of all claims made against each other. They also agreed not to object to each business’s
reorganization efforts at the bankruptcy courts.
“The
settlement will, among other things, significantly smooth the path to
confirmation of the Genesis Debtors’ chapter 11 plan of reorganization (the ‘Genesis
Plan’), as well
as eliminating the risks, expenses, and uncertainty associated with protracted
litigation among the FTX Debtors, the Genesis Debtors, and GGCI,” Genesis’s
lawyers explained in the court filing.
Fortex integrates with Haame CRM; Colt Partners with AsiaNext; read today’s news nuggets.
Bankrupt
cryptocurrency exchange, FTX, has agreed to settle its claims dispute with
equally bankrupt digital asset lender, Genesis, by accepting a payment of $175
million to Alameda Research, its affiliated insolvent crypto hedge fund.
Earlier in May, FTX had sought court permission to recover approximately $3.673
billion in alleged transfers it made to Genesis between August 13 and November
11, 2022.
Genesis
disclosed the settlement agreement yesterday (Wednesday) in a court document it filed to seek the approval
of the United States Bankruptcy Court for the Southern District of New York
for the deal. According to the crypto lender,
which declared bankruptcy in
January, both
parties reached the deal “in principle” on or around July 20.
The
agreement trailed several weeks of back and forth between both parties to determine what is owed. In a motion filed on June 1, Genesis “sought to
estimate the FTX claims at $0,” a move that was opposed by FTX. In one of the court sittings on the matter, the bankruptcy court ordered that the case “be continued to a later
hearing.” Moreover, FTX reduced its claims against Genesis to $2 billion.
FTX asks court to settle Genesis dispute for a $175 million Genesis claim, the release of a $175 million customer claim and (near worthless) Alameda claims.
Down from first $3.9 billion to $2 billion asserted, this must be the worst deal to date, especially in light of the new… pic.twitter.com/ipxHuWMU4A
— FTX 2.0 Coalition (@AFTXcreditor) August 17, 2023
Finance Magnates reported that FTX crumbled last year following a bank run on the
crypto exchange and the revelation that the firm was using customers’ assets to
prop Alameda Research’s balance sheets. FTX subsequently filed for bankruptcy
protection in
November.
Additionally, Genesis halted withdrawal processes last November, citing an unusual surge in customer requests after FTX’s collapse. The crypto lender sought an emergency loan of $1 billion from investors before later filing for bankruptcy protection in January, Finance Magnates reported.
However,
before their fall, FTX and Genesis engaged in “a large number of complex transactions”
involving fiat currency and digital assets between February
6, 2019, and
November 11, 2022. Owing to these transactions, FTX’s bankruptcy estate owes over
$350 million in customer, avoidance and loan claims to
Genesis, the defunct crypto lender claimed.
Terms of the Agreement
Meanwhile, if the settlement is approved by the
court, both parties have resolved to let go of all claims made against each other. They also agreed not to object to each business’s
reorganization efforts at the bankruptcy courts.
“The
settlement will, among other things, significantly smooth the path to
confirmation of the Genesis Debtors’ chapter 11 plan of reorganization (the ‘Genesis
Plan’), as well
as eliminating the risks, expenses, and uncertainty associated with protracted
litigation among the FTX Debtors, the Genesis Debtors, and GGCI,” Genesis’s
lawyers explained in the court filing.
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- Source: https://www.financemagnates.com//cryptocurrency/ftx-softens-4b-demand-strikes-175m-settlement-with-genesis/
