FTX Aims to Liquidate $175 Million Claim Against Genesis Amid Debt Settlement Plans
In Brief
In a recent court submission, FTX has expressed its intention to offload a $175 million claim against Genesis as a strategy to facilitate the repayment of its debts to creditors.
FTX The bankruptcy estate has put forth a request to the court aimed at disposing of its $175 million general unsecured claim against the now-defunct cryptocurrency lending service. Genesis FTX suggests selling these claims through either open auctions or private sales, allowing potential buyers to acquire the claims in full or in portions.
The funds generated from this sale will be directed towards settling debts and kickstarting the process to restructure financial obligations owed to creditors.
This move aligns with FTX's earlier decision to avoid resurrecting the cryptocurrency exchange, opting instead to liquidate its assets. This strategy is part of a broader effort ongoing efforts to reimburse customers who suffered losses due to its downfall in 2022.
Creditors of FTX have until February 15 to voice any objections regarding the anticipated sale of claims.
Genesis and FTX, which had previously engaged in substantial mutual claims, have ultimately arrived at a settlement with the collapsed exchange, leading to a $175 million claim against the lender. Under the terms of the settlement, both parties have relinquished any further claims against each other.
Genesis Global Capital, the lending branch of Genesis, had previously extended loans exceeding $2.8 billion to Alameda. Following the FTX incident that precipitated substantial customer withdrawals, Genesis sought Chapter 11 bankruptcy protection in January.
Genesis Addresses SEC's Allegations
Genesis and its cryptocurrency exchange counterpart Gemini have faced accusations from the U.S. Securities and Exchange Commission (SEC) for allegedly breaching U.S. securities laws through their cryptocurrency lending program. The firm is currently embroiled in a legal battle instigated by the New York Attorney General, implicating DCG and Gemini in a series of fraud allegations.
Recently, Genesis finalized a $21 million settlement with the SEC regarding the now-defunct Gemini Earn investment initiative. This proposed settlement is expected to yield various benefits for the Debtors’ estates, principally by resolving the civil action claim filed by the SEC in these circumstances. Chapter 11 Cases.
This resolution aims to mitigate the risks, costs, and uncertainties tied to extensive litigation against the SEC . According to the filing, the $21 million settlement will be allocated once Genesis has covered all other approved administrative expenses, secured, priority, and general unsecured claims.
The latest filing from FTX is poised to usher in a significant transition for the company, allowing it to advance its debt repayment and begin a revamped approach to its financial obligations to creditors. This development underscores a sense of satisfaction with the conclusion of the settlement with Genesis while taking proactive measures to bolster its financial standing.
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