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

Thursday, 17/08/2023 | 16:04 GMT by Solomon Oladipupo
  • Both parties reached the agreement 'in principle' on or around July 20.
  • Genesis raised over $350M in customer, avoidance and loan claims against FTX.
Genesis, FTX

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.

FTX's $4B Claim Ends in $175M Settlement

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.

FTX's $4B Claim Ends in $175M Settlement

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.

About the Author: Solomon Oladipupo
Solomon Oladipupo
  • 1050 Articles
  • 37 Followers
About the Author: Solomon Oladipupo
Solomon Oladipupo is a journalist and editor from Nigeria that covers the tech, FX, fintech and cryptocurrency industries. He is a former assistant editor at AgroNigeria Magazine where he covered the agribusiness industry. Solomon holds a first-class degree in Journalism & Mass Communication from the University of Lagos where he graduated top of his class.
  • 1050 Articles
  • 37 Followers

More from the Author

CryptoCurrency

!"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|} !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}