FTX Seeks to Sell $175M Claim Against Genesis as Part of Creditor Repayment Efforts
In Brief
FTX submitted a court filing intending to sell its $175 million claim against Genesis to facilitate debt repayment to creditors.
FTX bankruptcy estate submitted a filing to the court intending to sell its $175 million general unsecured claim against the defunct cryptocurrency lender Genesis. FTX has proposed divesting these claims through public auctions or private transactions to single or multiple purchasers, whether in entirety or as segmented portions.
The proceeds from this sale would be utilized to facilitate debt repayment and initiate the restructuring of its financial obligations to creditors.
The filing submission is in line with FTX’s recent announcement to refrain from reviving the cryptocurrency exchange, choosing instead to liquidate assets. This decision is part of the ongoing efforts to compensate customers impacted by its collapse in 2022.
FTX creditors are granted until February 15 to register objections to the proposed claims sale.
Genesis and FTX, initially involved in significant reciprocal claims, have ultimately settled with the collapsed exchange, resulting in a $175 million claim against the lender. Under the settlement agreement, both entities have also waived any other claims against each other.
Genesis Global Capital, the cryptocurrency lending division of Genesis, had previously provided loans surpassing $2.8 billion to Alameda. In January, Genesis filed for Chapter 11 bankruptcy protection following the FTX failure, which resulted in substantial customer withdrawals from its platform.
Genesis Navigates SEC’s Allegations
Genesis and cryptocurrency exchange Gemini were accused by the United States Securities and Exchange Commission (SEC) of violating the United States securities laws with their cryptocurrency lending program. The company remains entangled in a legal dispute initiated by the New York Attorney General, implicating DCG and Gemini and involving allegations of fraud.
Genesis recently reached a $21 million settlement with the SEC about the now-defunct Gemini Earn investment product. The proposed settlement is expected to bring several advantages to the Debtors’ estates, primarily by resolving the Civil Action Claim filed by the SEC in these Chapter 11 Cases.
This resolution aims to eliminate the risks, expenses, and uncertainty associated with prolonged litigation against the SEC. The filing elaborated that the $21 million settlement would be distributed once Genesis fulfills all other allowed administrative expenses, secured, priority, and general unsecured claims.
The recent FTX filing is set to initiate a transformative process for the company, enabling it to facilitate debt repayment and commence the restructuring of its financial obligations to creditors. This move signifies contentment with the settlement with Genesis and proactive steps toward strengthening its financial position.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
