FTX Softens $4B Demand, Strikes $175M Settlement with Genesis

The 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 permission from the court to recover approximately $3.673
billion in alleged transfers that it had made to Genesis between August 13 and November
11, 2022.

Genesis
disclosed the settlement agreement yesterday (Wednesday) in a court document. The crypto lender filed the document to seek approval for the agreement from the United States Bankruptcy Court for the Southern District of New York. According to the crypto lender,
which declared itself bankrupt in
January, both
parties reached the deal ‘in principle’ on or around July 20.

The
agreement was pursued over several weeks, going 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,” which was a move 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.” FTX further reduced its claims against Genesis down to $2 billion.

Finance Magnates reported that FTX crumbled last year following a bank run on the
crypto exchange as well as 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.

The 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 permission from the court to recover approximately $3.673
billion in alleged transfers that it had made to Genesis between August 13 and November
11, 2022.

Genesis
disclosed the settlement agreement yesterday (Wednesday) in a court document. The crypto lender filed the document to seek approval for the agreement from the United States Bankruptcy Court for the Southern District of New York. According to the crypto lender,
which declared itself bankrupt in
January, both
parties reached the deal ‘in principle’ on or around July 20.

The
agreement was pursued over several weeks, going 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,” which was a move 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.” FTX further reduced its claims against Genesis down to $2 billion.

Finance Magnates reported that FTX crumbled last year following a bank run on the
crypto exchange as well as 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.

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