Bankrupt FTX and Genesis Global to Settle Dispute in Bankruptcy Cases
Bankrupt crypto exchange FTX and crypto lender Genesis have come to an agreement to settle their disputes within their bankruptcy cases.
The agreement was disclosed in a letter submitted by their legal representatives to the US bankruptcy court for the Southern District of New York on Thursday.
“The Parties have reached an agreement in principle, subject to documentation, regarding a settlement that would resolve, among other things, the claims asserted by the FTX Debtors against the Debtors in these Chapter 11 Cases and the claims asserted by the Genesis Debtors against the FTX Debtors in the FTX Chapter 11 Cases,” the letter said.
The letter did not include any further details regarding the settlement.
Genesis emerged as the largest unsecured creditor of FTX following its bankruptcy. Court documents filed in January revealed that FTX owed Genesis $226 million.
Additionally, FTX claimed that Genesis Global owed it $3.9 billion, which was later reduced to $2 billion.
However, Genesis has denied these claims, even trying to throw out the FTX claims “to avoid undue delay in the timing and amount of creditor distributions, and to expeditiously pursue confirmation of a Chapter 11 plan.”
In May, FTX filed an application to recover funds totaling $2 billion from Genesis Global, including $1.8 billion in loans and $1.6 billion that Genesis allegedly withdrew from FTX’s trading platform before both companies went bankrupt.
The amount also included $273 million in collateral given to Genesis Global and $213 million reportedly taken by the crypto lender’s subsidiary.
In November last year, Genesis Global’s lending division halted redemptions and new loans following the collapse of FTX.
At the time, the company said the decision was made due to market dislocation and the loss of industry confidence caused by FTX’s implosion.
Eventually, Genesis filed for Chapter 11 bankruptcy protection in late January. Genesis Global Holdco LLC, plus subsidiaries Genesis Global Capital LLC and Genesis Asia Pacific Pte, were included in the bankruptcy filing.
The bankruptcy filing revealed that the top 50 unsecured claims totaled around $3.4 billion, with $1.2 billion owed to Earn users.
Gemini Sues DCG and CEO Barry Silbert
Eearlier this month, Gemini filed a lawsuit against the conglomerate Digital Currency Group (DCG) and its CEO Barry Silbert for allegedly defrauding creditors.
Genesis is owned by Digital Currency Group (DCG), a venture capital company focusing on the digital currency market.
The lawsuit came after Cameron Winklevoss, the billionaire co-founder of the Gemini crypto platform, put forth his “best and final offer” in the bankruptcy restructuring of digital asset lender Genesis.
In an open letter to Silbert, Winklevoss outlined the proposal, which included $1.5 billion in forbearance payments and fresh loans.
The plan included a $275 million forbearance payment, a $355 million debt tranche due in two years, and an $835 million debt tranche due in five years.
Under the proposal, DCG would retain the proceeds from the sale of Genesis Global Trading, while creditors would receive funds from the disposal of other Genesis companies.