May 25, 2024
Latest Cryptocurrency News

FTX and Genesis Entities Seek $176 Million Settlement Amidst Legal Dispute

FTX, the cryptocurrency exchange facing challenges, along with its CEO John J. Ray III, has submitted a motion to resolve matters with Genesis entities for a sum of $176 million.

According to a legal document, FTX Trading and associated debtors have formally requested legal intervention to address their dispute with Genesis entities, to settle claims totalling around $176 million. These claims put forth by Genesis entities encompass approximately $176 million in customer claims against FTX Trading and its affiliated parties.

Nonetheless, creditors of FTX have expressed dissatisfaction and have encouraged the Official Committee of Unsecured Creditors of FTX (UCC) to challenge the proposed agreement. They highlight a concern regarding Alameda’s transfer of substantial FTX customer funds to Genesis in 2022. Alameda currently confronts a $140 million claim related to avoidance, in addition to an outstanding loan claim of roughly $40 million. Furthermore, claims under section 502(h) of the Bankruptcy Code apply to eligible FTX Claims.

FTX presents the argument that potential recoveries from Genesis debtors and related entities are uncertain, making a settlement the most prudent approach to prevent further conflicts. Additionally, John Ray III, CEO of FTX, has provided a supporting statement for the motion, advocating for a settlement with Genesis and the associated remedies.

On August 17, the FTX 2.0 Coalition conveyed on X (formerly known as Twitter) that the proposed arrangement by FTX is highly unfavourable, particularly considering the ongoing Department of Justice (DOJ) investigation into DCG and Genesis. The post stated:

“Genesis claims are currently worth more than FTX’s even as Genesis lender balances are inflated by the interest they earned from lending, among others, to Alameda.”

Expecting opposition from the UCC, the coalition anticipates objections to the settlement because “Alameda used billions of FTX customer funds in 2022 to repay Genesis,” funds that rightfully belong to FTX customers.

Image by Freepik

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