April 19, 2024
Court Approves $175M Genesis Settlement, Clears Billions in Claims with FTX
Latest Cryptocurrency News

Court Approves $175M Genesis Settlement, Clears Billions in Claims with FTX

A New York bankruptcy judge has granted approval to a settlement between bankrupt cryptocurrency firms FTX and Genesis Global Trading (GGC), allowing FTX-affiliated Alameda Research to receive $175 million from GGC. The United States Bankruptcy Court for the Southern District of New York gave the green light to the settlement agreement between FTX and Genesis Global Holdings in a filing submitted on October 11.

Following this approval, Genesis debtors are officially authorized to enter into and execute the settlement agreement, which involves paying $175 million to FTX. Additionally, New York bankruptcy Judge Sean Lane has expunged multiple claims made by the FTX debtors against Genesis, in conjunction with approving the settlement amount.

The court accepted the withdrawal of numerous claims, including three by FTX Trading, six by Alameda Research, and six by West Realm Shires Services, representing FTX US. This approved settlement represents a significant reduction from the amount initially claimed by FTX debtors, who had collectively asserted claims totaling approximately $3.9 billion in May 2023. These claims involved $1.8 billion in alleged loan repayments from Alameda to GGC, $1.6 billion in assets reportedly withdrawn by Genesis debtors from FTX, and other assets.

Genesis had previously expressed that the settlement was considered “fair and equitable” and would help the company avoid “protracted litigation,” the outcome of which would be “inherently uncertain.” In contrast, FTX creditors had expressed dissatisfaction with the settlement and had urged the Official Committee of Unsecured Creditors of FTX to contest the agreement in August 2023.

The collapse of the FTX exchange in November 2022 had a profound impact on the cryptocurrency industry, triggering a widespread contagion. Among the companies affected by FTX’s failure was crypto lending firm Genesis, which lost access to $175 million worth of crypto assets locked in an FTX trading account. Genesis subsequently filed for bankruptcy in January 2023.

The settlement between Genesis and FTX coincides with the ongoing trial of FTX founder Sam Bankman Fried, who faces 13 charges related to fraud, money laundering, and bribery of officials.

Image by wirestock on Freepik

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