Bankrupt FTX wants to sell $175 million claim against Genesis to aid creditor repayment
FTX bankruptcy estate intends to sell its $175 million general unsecured claim against the collapsed crypto lender Genesis, according to a Feb. 2 court filing.
FTX proposed to divest these claims through public auctions or private transactions, either in entirety or in parts, with single or multiple purchasers. The generated funds would be used to facilitate debt repayment and also restructure its financial obligations to creditors.
This development aligns with FTXs recent commitment to not resurrecting the platform, opting to liquidate assets as part of the ongoing efforts to compensate customers affected by its 2022 collapse.
Data from Claims Market showed that over $1 million in customer claims were trading at over 65 cents on the dollar as of the end of January.
FTX creditors have until Feb. 15 to voice objections to this proposed claim sale.
Genesis filed for Chapter 11 bankruptcy protection in January after the failure of FTX triggered mass customer withdrawals on its platform.
Genesis and FTX, initially engaged in substantial reciprocal claims, eventually settled with the failed exchange, holding a $175 million claim against the collapsed lender. Under the settlement agreement, both parties also relinquished other claims held against each other. Genesis Global Capital, the crypto lending arm of Genesis, had previously extended loans exceeding $2.8 billion to Alameda.
Genesis settles SEC lawsuit.
A recent court filing revealed that Genesis reached a $21 million settlement with the U.S. Securities and Exchange Commission (SEC) concerning the now-defunct Gemini Earn investment product.
The proposed settlement will, among other benefits to the Debtors estates, resolve the Civil Action Claim filed by the SEC in these Chapter 11 Cases and eliminate the risks, expenses, and uncertainty associated with protracted litigation against the SEC, the filing stated.
The filing further explained that the $21 million settlement would be disbursed after Genesis fully pays all other allowed administrative expense, secured, priority, and general unsecured claims.
The SEC had alleged that Gemini and Genesis violated U.S. securities laws through the crypto lending program.
Meanwhile, the company is still embroiled in a lawsuit filed by the New York Attorney General, which also involves DCG and Gemini, over allegations of fraud.
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Text source: CryptoSlate
