Genesis, FTX Strike Deal for $175M Bankruptcy Claim

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By coindesk.com August 17, 2023 In FTX

Though a sharp drop from the $4 billion originally claimed, lawyers hope it will let them get on with winding up estates.

Cameron Winklevoss, co-founder of the Gemini crypto exchange, tweeted what he described as a “final offer” in the debt-restructuring talks over the bankrupt digital asset firm Genesis, bringing months of negotiations and mediation to a head with a plan for $1.5 billion in forbearance payments and fresh loans. Michael Moro, the former CEO of Genesis Trading, who is now the CEO at crypto derivatives exchange Ankex shares reaction. DCG is the parent company of both Genesis and CoinDesk.

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FTX’s Alameda Research can make a claim worth $175 million from the estate of similarly bankrupt crypto company Genesis, according to a legal deal submitted in Wednesday court filings.

The deal, which also waives Genesis’ parallel claims against FTX, represents a significant reduction from the nearly $4 billion FTX originally sought.

Lawyers hope it will help the companies wind up affairs and return funds to customers, after lender Genesis Global Capital filed for bankruptcy in January. Genesis and CoinDesk both belong to the Digital Currency Group.

“The settlement will, among other things, significantly smooth the path to confirmation of the Genesis Debtors’ chapter 11 plan of reorganization” without the cost of extended litigation, a court filing made by Genesis’ lawyers said.

In a parallel court filing, FTX’s Chief Executive Officer John J. Ray III agreed the deal was fair, saying it represented FTX’s best interests given legal uncertainties about the claims.

The crypto winter has seen the collapse of multiple crypto companies which often had complex financial interrelationships, which lawyers are now attempting to unpick in parallel bankruptcy proceedings.

FTX’s original claims against Genesis amounted to $3.88 billion, including loan repayments made by hedge fund arm Alameda Research and assets withdrawn by Genesis from the FTX exchange in the run up to its November bankruptcy.

In the other direction, Genesis Global Capital is FTX’s largest unsecured creditor, with court filings citing $226 million owed.

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In July, lawyers announced they’d reached an agreement in principle but did not release full details. The deal has now been submitted to the judges administering each company for approval, with hearings set for September 6 and 13.

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