A bankruptcy judge in New York has granted approval for a settlement agreement between the insolvent cryptocurrency companies FTX and Genesis Global Trading (GGC). This ruling allows FTX-affiliated Alameda Research to receive $175 million from GGC.
The United States Bankruptcy Court for the Southern District of New York endorsed the settlement between FTX and Genesis Global Holdings, GGC’s parent company, in a document filed on October 11. Following this approval, the Genesis debtors have received the green light to carry out the settlement agreement and make a payment of $175 million to FTX.
Additionally, as part of the approval process, Judge Sean Lane, the New York bankruptcy judge, has dismissed multiple claims made by FTX debtors against Genesis.
According to the official filing, the court has accepted the withdrawal of numerous claims, including three from FTX Trading, six from Alameda Research, and six from West Realm Shires Services, which represents FTX US.
This approved settlement represents a substantial reduction from the original claims made by FTX debtors, who had initially asserted claims totaling approximately $3.9 billion in May 2023. These claims included about $1.8 billion in alleged loan repayments by Alameda to GGC, $1.6 billion in assets supposedly withdrawn by Genesis debtors from FTX, and other assets.
Genesis had previously stated that the settlement was deemed “fair and equitable” and would help the company avoid engaging in “prolonged legal battles,” the results of which would be “inherently uncertain.” In contrast, FTX creditors expressed dissatisfaction with the settlement and urged the Official Committee of Unsecured Creditors of FTX to challenge the agreement in August 2023.
The collapse of the FTX exchange in November 2022 had a profound impact on the cryptocurrency industry, leading to a widespread contagion. Genesis, a crypto lending company, was among the businesses affected due to its exposure to FTX, which resulted in a loss of access to $175 million worth of crypto assets held in an FTX trading account. In response, Genesis filed for bankruptcy in January 2023.
This settlement between Genesis and FTX coincides with the ongoing trial of FTX founder Sam Bankman Fried, who is facing 13 charges, including fraud, money laundering, and bribery of officials.