Genesis’ Clash With FTX Over Funds Likely to Delay its Creditor Payout: Report

According to US Bankruptcy Judge Sean Lane, Genesis, whose payment plan was pending approval, will first have to resolve its outstanding issues with FTX.

The announcement came just hours after DCG CEO Barry Silbert’s Cameron Winklevoss ultimatum expired, meaning there’s also another lawsuit against Genesis’ parent company on the horizon. The response to said ultimatum, which would have forced DCG to stick to the payment plan, may now be beyond DCG’s control to begin with.

Awfully optimistic

During a preliminary hearing regarding Genesis’ creditors’ payment plan, Manhattan-based bankruptcy judge Sean Lane stated that any further hearings regarding that proposal would likely be delayed until the company’s legal dispute with FTX is resolved, according for bloomberg.

“This schedule seems very optimistic. My understanding is that these deadlines are likely to be delayed.”

However, the final verdict on the payment plan is still out of the question. The parties proposed “dueling proceedings” in order to settle FTX’s claim, a request that Judge Lane denied.

The judge also denied a second request by FTX to sue Genesis in a Delaware court and another from the previous one for a hearing to decide whether the claim was legitimate in the first place.

The right to confidentiality

Genesis’ debt to FTX has been explicitly denied by the company in previous hearings with Judge Lin, who outright denied access to the exchange’s legal counsel’s confidential brokerage sessions.

“There will be a certain amount of radio silence because mediation needs that to be successful. Shortening mediation does not shorten the case.”

FTX originally claimed that Genesis owed it about $4 billion, a claim that has since been revised down to just $2 billion. This, in turn, suggests that FTX is overestimating the scope of its business deal with the fellow cryptocurrency lending platform at best and simply understating at worst. As far as Genesis is concerned, FTX is “entitled to claim a total of $0.00.”

Judge Lane ordered the two platforms to exchange information regarding the alleged debt and to file a report at a later date. Until then, the court will refrain from ruling on whether FTX is allowed to sue Genesis in the first place.

Once the parties have exchanged the necessary information, the court may schedule the hearing Genesis has requested regarding the amount of its debt to FTX – assuming it exists in the first place.