Court Approves Genesis’ $175M Award to FTX, Dismisses Billions in Claims

A New York bankruptcy judge has approved a settlement between bankrupt cryptocurrency companies FTX and Genesis Global Trading (GGC), allowing FTX-linked Alameda Research to receive $175 million from GGC.

The United States Bankruptcy Court for the Southern District of New York has given the green light to a filing agreement filed on October 11 between FTX and GGC's parent company, Genesis Global Holco.

Following the approval, Jane's debtors were officially authorized to enter into the agreement and pay $175 million to FTX.

Along with approving the settlement amount, New York Bankruptcy Judge Sean Lane dismissed several claims by FTX's debtors related to Genesis.

According to the filing, the court accepted dismissal of several claims, including three claims by FTX Trading, six claims by Alameda Research, and claims by West Real Shares Services representing FTX US.

The settlement approved by May 2023 represents a significant reduction from the amount originally requested by FTX borrowers, who filed claims totaling approximately $3.9 billion. FTX's claims stem from nearly $1.8 billion in loan repayments made by Alameda to GGC, $1.6 billion in assets taken from FTX by Genesis borrowers, and other assets.

Genesis previously said the settlement was “fair and equitable” and would allow the company to avoid pursuing a “protracted litigation process,” the outcome of which is “inherently uncertain.” On the other hand, FTX's creditors expressed dissatisfaction with the settlement and urged FTX's Official Committee of Unsecured Creditors to veto the deal in August 2023.

RELATED: Caroline Ellison presents 7 ‘alternative' balance sheets that hide Alameda's exposure to FTX

The FTX exchange crashed in November 2022, sparking a massive contagion in the cryptocurrency industry. Crypto lending firm Genesis was one of several companies affected by the FTX collapse due to its exposure to FTX, with its derivatives business losing access to $175 million worth of crypto assets locked in FTX trading accounts. After ceasing withdrawals in November 2022, Genesis filed for bankruptcy in January 2023.

Genesis' deal with FTX comes as FTX founder Sam Bankman Fried faces 13 charges including fraud, money laundering and bribery.

Magazine: Magazine: Blockchain Investigators – Matt Gox's Collapse Saw the Birth of Chinalice