Bankrupt crypto exchange, FTX, and its debtors have suggested reducing the maximum settled value in their proposed settlement with insolvent digital asset lender, Genesis, from $10 million to $7 million. The change followed opposition by the US Trustee to the $175 million settlement agreement reached by both crypto firms.
FTX and Genesis Agree to $175M Settlement
Last week, FTX filed a motion, seeking court approval for Genesis to pay the settlement amount to Alameda Research, its affiliated but equally bankrupt crypto hedge fund. The agreement represents a big compromise for FTX which had earlier sought to recover nearly $4 billion in transfers it allegedly made to the crypto lending firm between August 13 and November 11, 2022.
The deal was supported by FTX’s Official Committee of Unsecured Creditors which explained that the settlement strikes an appropriate balance between what may have been obtained through successful litigation and the inherent risks and costs of proceeding (in an already expensive case) with such litigation, and results in a net benefit for the FTX Debtors’ estates.”
FTX asks court to settle Genesis dispute for a $175 million Genesis claim, the release of a $175 million customer claim and (near worthless) Alameda claims.Down from first $3.9 billion to $2 billion asserted, this must be the worst deal to date, especially in light of the new… pic.twitter.com/ipxHuWMU4A
— FTX 2.0 Coalition (@AFTXcreditor) August 17, 2023
However, FTX and its debtors in a court document filed on Sunday noted that the US Trustee, which is the office in the US Department of Justice that oversees the administration of bankruptcy cases, criticized the move. They argued that the objection should be overruled and the motion granted.
“The US Trustee—the sole objector to the Motion—seeks to inject itself into a routine settlement process that is already adequately safeguarded by two different creditor committees,” FTX explained.
Meanwhile, in addition to the adjustment made to the maximum settled value, FTX and its debtors in a bid to address the issues raised by the US Trustee in its objection have proposed filing monthly reports of executed settlements. They also want to include US Trustee as a third “noticed party” in the arrangement.
Finance Magnates reported that FTXand Genesisbefore filing for bankruptcy protection in the US last year engaged in “a large number of complex transactions” involving fiat and cryptocurrencies between February 2019, and November 2022. According to Genesis, these transactions left FTX's bankruptcy estate with a debt exceeding $350 million to its business. The amount includes customer, avoidance and loan claims, the bankrupt crypto lender claimed.
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This article was written by Solomon Oladipupo at www.financemagnates.com.
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