Bankrupt Crypto Firms FTX and Genesis Reach $175M Settlement Amid Market Turmoil
Summary:
The US Bankruptcy Court has approved a $175 million settlement between insolvent cryptocurrency firms FTX and Genesis Global Trading (GGC). The settlement sees FTX-associated Alameda Research receive the mentioned amount from GGC's parent company, Genesis Global Holdco. Despite the previous claims reaching close to $1.8 billion, this settlement has been marked as a substantial reduction. FTX collapsed in November 2022, subsequently affecting the whole crypto sector, including Genesis, which lost access to digital assets worth $175 million. The settlement comes during the ongoing trial of FTX founder Sam Bankman Fried, who faces 13 charges including fraud and money laundering.
A bankruptcy judge in New York has sanctioned a resolution between the insolvent crypto firms FTX and Genesis Global Trading (GGC). The decision permits Alameda Research, affiliated with FTX, to receive $175 million from GGC. The settlement between FTX and GGC's parent entity, Genesis Global Holdco, was authorized by The United States Bankruptcy Court for the Southern District of New York in a document filed on October 11. Post-approval, Genesis debtors have been formally empowered to adhere to and perform according to the settlement agreement, delivering $175 million to FTX.
Bankruptcy Judge Sean Lane, based in New York, who approved the settlement sum, concurrently dismissed several claims lodged by FTX debtors against Genesis. The court acknowledged the withdrawal of a plethora of claims, which includes three by FTX Trading, six by Alameda Research, and six by West Realm Shires Services that represents FTX US, stated in the filing.
The sanctioned settlement signifies a substantial decrease from the amount initially demanded by FTX debtors, who had jointly lodged claims amounting to roughly $3.9 billion in May 2023. Alleged loan repayments of approximately $1.8 billion paid out by Alameda to GGC, withdrawn assets valued around $1.6 billion by Genesis debtors from FTX, among other assets, were included in the FTX claims.
Genesis has allegedly stated in the past that the settlement is "fair and just" and enables the company to circumvent extended and disputed legal proceedings with uncertain outcomes. Contrarily, FTX creditors voiced dissatisfaction with the agreement and, in August 2023, encouraged the Official Committee of Unsecured Creditors of FTX to dispute the agreement.
The FTX exchange faced a collapse in November 2022, which resulted in a market-wide ripple effect in the cryptocurrency sector. Among the numerous firms adversely affected by FTX's failure was crypto lending establishment Genesis, due to its exposure to FTX; their derivatives division lost access to cryptocurrency assets worth $175 million stored in an FTX trading account. In January 2023, Genesis filed for bankruptcy, following suspension of withdrawals in November 2022.
The ongoing legal proceedings against FTX founder Sam Bankman Fried, who is dealing with 13 accusations involving fraud, money laundering, and the bribing of officials, are occurring alongside Genesis' settlement with FTX.
Published At
10/12/2023 11:00:00 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.