FTX and Genesis settle for $175 million, Creditors' Committee: The worst deal so far
The bankruptcy team had attempted to claim the $3.9 billion loan that FTX had repaid to Genesis before the bankruptcy, but FTX's restructuring CEO John Ray believed that continuing the lawsuit would consume a significant amount of time, money, and resources. He considered the settlement fair and just, with the agreed-upon amount falling "completely within a reasonable range" for both parties.
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FTX Once Claimed $3.9 Billion from Genesis
In May of this year, the FTX bankruptcy team attempted to claim $3.9 billion from Genesis in the complex lending relationship between FTX and Genesis, citing "significant assistance to FTX's fraudulent business model" as the reason for the claim before FTX went bankrupt.
The FTX restructuring team made several statements at the time:
FTX had repaid nearly $3.9 billion in loans to Genesis before the bankruptcy
Genesis Trading subsidiary GGC acted as an active fund institution for Alameda
Genesis was the promoter of FTX's fraud: Genesis was one of the main sources of funds for FTX and assisted in its fraudulent business model
Recap: Restructuring team accuses Genesis of being the promoter of FTX fraud, demands return of nearly $3.9 billion
However, what initially seemed like a significant claim in favor of retail creditors has now seen a substantial decrease in the settlement amount between the two parties.
FTX, Genesis Settle for $175 Million
According to legal documents, Genesis has agreed to pay $175 million to Alameda Research, an institution under FTX, and has agreed to waive all claims against FTX.
He mentioned in the documents:
Litigation with Genesis would consume a significant amount of time, money, and resources, coupled with the uncertainty and risks brought about by the differing claims of both parties. My conclusion is that a settlement agreement is in the best interest of the debtor FTX, far better than continuing to litigate.
FTX Creditors' Committee: Worst Deal to Date
The Unsecured Creditors Committee (UCC) tweeted that Genesis received a significant amount of interest from loans to FTX and Alameda, and the funds repaid by Alameda to Genesis in 2022 may even be traceable back to FTX user deposits.
Interestingly, FTX's claim against Genesis has decreased from the initial $3.9 billion to $2 billion, which the UCC considers to be the worst deal to date, and the UCC is expected to oppose the FTX restructuring team.
Note: The UCC mentioned the $2 billion figure, which did not appear in the documents.
A hearing to approve this settlement agreement will be held on September 13th.
