- Bankrupt crypto exchange FTX and crypto lender Genesis have agreed in principle to settle claims brought in by FTX’s bankruptcy case
- The specific details of the settlement were not disclosed in the letter sent to the bankruptcy judge
- The settlement aims to resolve FTX’s claims against Genesis debtors and vice versa, potentially offering relief to creditors
Bankrupt cryptocurrency exchange FTX and a crypto lender Genesis, have come to an initial agreement to resolve the claims raised by FTX during its bankruptcy case. The legal representatives of both companies sent a letter to the bankruptcy judge, indicating their intention to settle. However, the letter has not disclosed the specifics of the settlement.
Both FTX and Genesis are facing bankruptcy and have been attempting to collect funds for their creditors. This is while operating under court supervision. The proposed settlement aims to address FTX’s claims against Genesis debtors and vice versa. Moreover, it would also result in the withdrawal of pending motions related to these claims. The parties intend to document the settlement and seek court approval in a timely manner.
To finalize the terms of the settlement, the companies have requested an extension of upcoming deadlines for current motions and due briefs. This extension will allow them the necessary time to reach a comprehensive agreement.
In the past, FTX asserted that Genesis, which is a subsidiary of Digital Currency Group, owed the bankrupt exchange a substantial sum of up to $4 billion. However, in a recent letter to Judge Lane, FTX reduced this amount to $2 billion.
Genesis had previously filed for Chapter 11 bankruptcy protection in a New York bankruptcy court. This came after the collapse of the crypto hedge fund, Three Arrows Capital. As the largest unsecured creditor of FTX and its affiliates, Genesis claims it is owed $226 million, as stated in court filings.
In June, FTX’s debtors contested Genesis’ estimation of claims amounting to zero. It appears that these disputes have been resolved with the current agreement between the parties.
The agreement in principle between FTX and Genesis marks a significant step. It is a step toward resolving the complex issues surrounding their bankruptcy cases. Once the details are approved by the court, it could bring some clarity to the financial standing of both companies. Moreover, it could potentially provide relief to their respective creditors.
The cryptocurrency industry’s rapid growth and volatility have exposed some players to financial challenges, leading to bankruptcy cases like those of FTX and Genesis. As the industry continues to evolve, regulatory measures and risk management practices will play an essential role in ensuring the stability and sustainability of crypto businesses. Investors and participants in the cryptocurrency market will likely closely monitor the outcomes of these bankruptcy cases, as they may set important precedents for future financial disputes within the crypto sector.