Bankrupt FTX and Genesis Reach In-Principle Agreement to Settle Claims
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Bankrupt crypto companies FTX and Genesis reached an in-principle agreement to resolve claims brought against each other.
The agreement, which didn’t contain specifics, was sent to a bankruptcy judge by their lawyers, who said it would resolve their respective claims.
Crypto exchange FTX and crypto lender Genesis are under court supervision in their efforts to collect funds for their respective creditors after they filed for Chapter 11 protection.
Both parties expressed their intent to promptly document the settlement and seek court approval for its resolution.
@Geminiearn @Gemini
Genesis Debtor just submitted this letter to the court indicating agreement with FTX. Lift Stay Motion and Estimation will be mooted. Waiting for the "Settlement" to see what the numbers are. pic.twitter.com/hvRK8lX6X6— CryptoEquality (@crypto_equality) July 28, 2023
An excerpt from the agreement reads:
“This settlement will resolve various claims, including those asserted by the FTX Debtors against the Debtors in these Chapter 11 Cases and the claims asserted by the Genesis Debtors against the FTX Debtors in the FTX Chapter 11 Cases.”
The companies have requested the court to suspend some upcoming deadlines to allow them more time to finalize the terms and conditions of the settlement.
FTX is Genesis’s Largest Creditor With $226M in Debt
The bankrupt crypto exchange has previously claimed that the crypto lending firm owed it approximately $4 billion, but subsequently reduced that to $2 billion.
In June 2023, FTX debtors raised issues with Genesis estimations saying it had no entitlement to any claims. Genesis had filed for Chapter 11 bankruptcy protection in January following the collapse of Three Arrow Capital.
According to the fillings, FTX was the largest unsecured debtor of Genesis, which had $226 million owed to it by the Sam Bankman-Fried-led crypto empire. All the claims and objections have been resolved with the latest development.
Genesis Has $226 Million in Statements Against FTX – https://t.co/6wmcxDcPzp
Genesis – a major crypto lending device that filed for bankruptcy on Thursday – was shown as FTX’s top rated unsecured creditor in the exchange’s possess personal bankruptcy docume… pic.twitter.com/XTzzhFNDLB
— Crypto Magazine (@CryptoMag01) January 21, 2023
Since this court proceeding mainly involves these two firms under Chapter 11 bankruptcy laws, the funds will be transferred from one debtor to benefit another. Determining which ones to be prioritized is a different question altogether.
Lawyers representing the current FTX management have previously claimed that Genesis played a significant role as one of the main fund providers for FTX and was instrumental in facilitating its fraudulent business model. According to the filings, at a certain point in 2021, the lender had more than $8 billion in outstanding loans to FTX affiliate Alameda Research.
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