Key Takeaways
- The proposed settlement aims to address the claims brought forth by both parties against each other.
- The agreement, once finalized, will effectively put an end to pending motions related to the disputed claims, resolving FTX’s grievances against Genesis debtors and vice versa.
In a major breakthrough, two prominent cryptocurrency companies, FTX and Genesis Global, have reached a settlement agreement to resolve their Chapter 11 bankruptcy cases. The companies, both grappling with financial woes, had been embroiled in a contentious dispute over a substantial sum of money, which raised concerns about potential delays in the bankruptcy process and creditor payments.
The initial disagreement centered around FTX’s claim that Genesis Global owed them a staggering $3.9 billion, an assertion that Genesis vehemently refuted. After intense negotiations, the disputed amount was eventually reduced to a maximum of $2 billion.
In a letter addressed to the bankruptcy judge, Sean Lane, on Thursday, July 27, the legal representatives of both FTX and Genesis Global revealed that they had agreed, in principle, to a settlement. However, specific details about the terms of the agreement were not disclosed in the letter.
The proposed settlement aims to address the claims brought forth by both parties against each other, bringing much-needed relief to the creditors of Genesis. As both firms remain under court supervision, they have been actively working to recover funds for their respective creditors throughout the bankruptcy proceedings.
The agreement, once finalized, will effectively put an end to pending motions related to the disputed claims, resolving FTX’s grievances against Genesis debtors and vice versa. The legal teams of both companies have expressed their intent to promptly document the settlement and seek court approval through a motion pursuant to Federal Rule of Bankruptcy Procedure 9019(a).
FTX, filed an application in May to reclaim funds from Genesis Global, citing a significant sum of $1.8 billion in loans and $1.6 billion allegedly withdrawn by Genesis from FTX’s trading platform just before the companies declared bankruptcy. The amount also includes $273 million in collateral previously entrusted to Genesis Global and an additional $213 million reportedly taken by a subsidiary of the crypto lender.
Following FTX’s collapse in November, Genesis Global Capital, the lending division of Genesis, temporarily suspended redemptions and new loans. Subsequently, Genesis filed for Chapter 11 bankruptcy protection in a New York bankruptcy court in January following the collapse of the crypto hedge fund Three Arrows Capital.
