FTX Aims to Offload $175M Claim Against Genesis in Effort to Settle Debt
FTX, the defunct cryptocurrency giant, has taken a significant step by filing a motion in a Delaware court to seek approval for the sale of its $175 million claim against Genesis Global Capital, a bankrupt digital financial services firm.
The claim, originally initiated by Alameda Research, a hedge fund linked to the collapsed cryptocurrency exchange, is now part of FTX’s strategy to compensate customers affected by its 2022 collapse.
FTX’s motion in the Delaware bankruptcy court seeks permission to sell the $175 million claim it acquired against Genesis through a settlement last year. The cryptocurrency exchange plans to auction or privately transact these claims as part of its strategy to liquidate assets and address financial challenges.
This decision aligns with FTX’s overall strategy, which focuses on liquidating assets rather than attempting to revive the collapsed cryptocurrency exchange.
The motion argues that the sale is in the best interests of all parties involved, including debtors, creditors, and interest holders. However, concerned parties have until February 15th to raise objections to the proposed sale.
The motion also requests approval for a standardized sales procedure to enhance efficiency.
FTX initially sought a substantial $3.9 billion recovery from Genesis in May, utilizing the provisions available under bankruptcy law. However, a negotiated settlement of $175 million was reached between FTX and Genesis in August, which was later court-approved in October.
This settlement marked the conclusion of other claims against Genesis by FTX, showcasing a pragmatic approach to avoid prolonged and costly litigation.
Genesis Global Capital, a subsidiary of Digital Currency Group (DCG), filed for bankruptcy in January 2023, sparking legal conflicts, particularly with the Gemini cryptocurrency exchange. Genesis managed a program for Gemini, but it had to stop when Genesis faced money issues.
Recently, on February 1st, Genesis agreed to pay $21 million to the U.S. Securities and Exchange Commission (SEC) due to problems with the Gemini program. This settlement is expected to play a significant role in Genesis Global Capital’s ongoing bankruptcy reorganization process.
FTX’s decision to sell the claim is a major change for the company. They hope it will help pay off debts and make financial changes. This demonstrates the company’s satisfaction with the Genesis settlement and highlights proactive efforts to strengthen its financial position in the crypto world.