FTX Intends to Sell $175 Million Claim Against Genesis to Fulfill Customer Repayment
FTX, the defunct cryptocurrency giant, has taken a significant step towards compensating its customers affected by its collapse in 2022. The company has filed a motion in a Delaware court to seek approval for the sale of its $175 million claim against Genesis Global Capital, a financially troubled digital services firm. This move is part of FTX’s plan to prioritize asset liquidation and address its financial challenges.
The motion filed by FTX aims to obtain permission to sell the $175 million claim, which was initially made by Alameda Research, a hedge fund associated with the now-collapsed cryptocurrency exchange. FTX intends to either auction or privately transact these claims, as part of its strategy to liquidate assets and recover financially.
FTX is emphasizing its commitment to liquidating assets rather than attempting to revive the collapsed cryptocurrency exchange. The motion argues that selling the claim is in the best interests of all stakeholders, including debtors, creditors, and interest holders. However, interested parties have until February 15th to voice any objections to this significant move.
In addition to seeking approval for the sale, the motion also aims to establish a standardized sales procedure, which would streamline the process and lead to increased efficiency and faster resolution of financial matters.
FTX’s journey towards recovering financially began when it initially sought a substantial $3.9 billion recovery from Genesis in May. However, the company eventually negotiated a settlement of $175 million in August, which was later court-approved in October. This pragmatic approach allowed FTX to resolve its claims against Genesis without engaging in prolonged and costly litigation.
Genesis Global Capital, a subsidiary of Digital Currency Group (DCG), filed for bankruptcy in January 2023, leading to legal conflicts, particularly with the Gemini cryptocurrency exchange. Genesis was managing a program for Gemini, but had to discontinue it due to financial 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.
The decision by FTX to sell its claim against Genesis represents a significant change for the company. It aims to use the proceeds from the sale to pay off debts and make necessary financial changes. This move demonstrates FTX’s satisfaction with the Genesis settlement and highlights its proactive efforts to strengthen its financial position in the crypto world.